#oligopoly

After all, the merger turned Boeing into the single largest exporter in America, a company far too big to fail, teeing up tens of billions from Uncle Sucker, who also account for 40% of Boeing's income:

https://www.thebignewsletter.com/p/its-time-to-nationalize-and-then

The US government is full of ex-Boeing execs, just as Boeing's executive row is full of ex-US federal aviation regulators. Bill Clinton's administration oversaw the creation of Boeing's monopoly in the 1990s, but it was the GOP that rescued Boeing the first time the 737 Maxes started dropping out of the sky.

Boeing's biggest competitor is the state-owned Airbus, a joint venture whose major partners are the governments of France, Spain and Germany – governments that are at least theoretically capable of thinking about the public good, not short-term profits. Boeing's largest equity stakes are held by the Vanguard Group, Vanguard Group subfiler, Newport Trust Company, and State Street Corporation:

https://prospect.org/blogs-and-newsletters/tap/2024-01-18-airbus-advantage/

As Matt Stoller says, America has an airline that the public bails out, protects, and subsidizes but has no say over. Boeing has all the costs of public ownership and none of the advantages. It's the epitome of privatized gains and socialized losses.

This is Reagan's other legacy, besides the disastrous shortage of air-traffic controllers. The religious belief in deregulation – especially deregulation of antitrust enforcement – leads to a deregulated market. It leads to a market that is regulated by monopolists who secretly deliberate, behind closed board-room doors, and are accountable only to their shareholders. These private regulators are unlike government regulators, who are at least nominally bound by obligations to transparency and public accountability. But they share on thing in common with those public regulators: when they fuck up, the public has to pay for their mistakes.

It's a good thing Boeing's executives are too big to fail, because they fail constantly. Boeing execs who are warned by subcontractors of dangerous defects in their planes order those subcontractors to lie, or lose their contracts:

https://www.levernews.com/boeing-supplier-ignored-warnings-of-excessive-amount-of-defects-former-employees-allege/

As a result of Boeing's mismanagement, America's only aircraft supplier steadily has lost ground to Airbus, which today enjoys a 2:1 advantage over Boeing. But it's not just Boeing that's the weak link aviation. US aviation is a chain entirely composed of weak links.

Take jet engines: Pratt & Whitney are Spirit's major engine supplier, but these engines suck as much as Boeing's fuselages. Much of Spirit's fleet is chronically grounded because the engines don't run. The reason Spirit buys its engines from those loveable goofballs at Pratt & Whitney? The Big Four airlines have bought all the engines for sale from other suppliers, leaving smaller airlines to buy their engines from fat-fingered incompetents.

This is why – as Dayen notes – smaller US airlines are so horny for intermarriage. They can't grow by adding routes, because there are no pilots. Even if they could get pilots, there'd be no slots because there are no air traffic controllers. But even if they could get pilots and slots, there are no planes, because Boeing sucks and Airbus can't make planes fast enough to supply the airlines that don't trust Boeing. And even if they could get aircraft, there are no engines because the Big Four aviation cartel cornered the market on working jet engines.

Part of Jetblue and Spirit's pitch was that they hand off the routes that they'd cut after their merger to other small airlines, like Frontier and Allegiant. But Frontier and Allegiant can't service those routes: they don't have pilots, slots, planes or engines.

Spirit hasn't been profitable since 2019 and is sitting on $4b in debt. Jetblue was proposing to finance its acquisition with another $3.5b in debt. The resulting airline could only be profitable by sharply cutting routes and massively raising prices, cutting 6.1m seats/year. With a debt:capital ratio of 111%, the company would have no slack and would need a bailout any time anything went wrong. Not coincidentally, the Big Four airlines also have debt:capital ratios of about 100-120%, and they do get bailouts ever time anything goes wrong.

As William McGee reminds us, it's been 14 years since anyone's started a new US airline:

https://twitter.com/WilliamJMcGee/status/1747363491445375072

US aviation is deeply cursed. But Boeing's self-disassembling aircraft show us why we can't fix it by allowing mergers: private monopolies, shorn of the discipline of competition and regulation, are extraction machines that turn viable businesses into debt-wracked zombies.

This is a subject that's beautifully illustrated in Dayen's 2020 book Monopolized, in the chapter on health care:

https://pluralistic.net/2021/01/29/fractal-bullshit/#dayenu

The US health care system has been in trouble for a long time, but the current nightmare starts with the deregulation of pharma. Pharma companies interbred with one another in a string of incestuous marriages that produced these dysfunctional behemoths that were far better at shifting research costs to governments and squeezing customers than they were at making drugs. The pharma giants gouged hospitals for their products, and in response, hospitals underwent their own cousin-fucking merger orgy, producing regional monopolies that were powerful enough to resist pharma's price-hikes. But in growing large enough to resist pharma profiteering, the hospitals also became powerful enough to screw over insurers. Insurers then drained their own gene pool by combining with one another until most of us have three or fewer insurers we can sign up with – companies that are both big enough to refuse hospital price-hikes, and to hike premiums on us.

Thus monopoly begets monopoly: with health sewn up by monopolies in medical tech, drugs, pharmacy benefit managers, insurance, and hospitals, the only easy targets for goosing profits are people:

https://pluralistic.net/2022/01/05/hillrom/#baxter-international

This is how you get a US medical system that costs more than any other rich nation's system to operate, delivers worse outcomes than those other systems, and treats medical workers worse than any other wealthy country.

Now, rich people can still buy their way out of this mess, but you have to be very rich indeed to buy your way out of the commercial aviation system. There's a lot of 1%ers who fly commercial, and they're feeling the squeeze – and there's no way they're leasing their own jets.

Stein's Law holds that "anything that can't go on forever will eventually stop." America's aviation mergers – in airlines, aircraft and engines – have hollowed out the system. The powerful, brittle companies that control aviation have so much power over their workforce that they've turned air traffic controller and pilot into jobs that no one wants – and they used their bailout money to buy out the most senior staff's contracts, sending them to early retirement.

Now, I'm with the people who say that most of US aviation should be replaced with high-speed rail, but that's not why our technocrats and finance barons have gutted aviation. They did it to make a quick buck. A lot of quick bucks. Now the system is literally falling to pieces in midair. Now the system is literally on fire:

https://www.nytimes.com/2024/01/19/us/miami-boeing-plane-engine-fire.html

Which is how you get a Reagan appointed federal judge issuing an opinion that has me punching the air and shouting, "Yes, comrade! To the barricades!" Anything that can't go on forever will eventually stop. When the system is falling to pieces around you, ideology disintegrates like a 737 Max.

I'm Kickstarting the audiobook for The Bezzle, the sequel to Red Team Blues, narrated by @wilwheaton! You can pre-order the audiobook and ebook, DRM free, as well as the hardcover, signed or unsigned. There's also bundles with Red Team Blues in ebook, audio or paperback.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2024/01/21/anything-that-cant-go-on-forever/#will-eventually-stop

Image: Vitaly Druchenok (modified) https://commons.wikimedia.org/wiki/File:ECAir_Boeing_737-306_at_Brazzaville_Airport_by_Vitaly_Druchenok.jpg

CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0/deed.en

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Joe Ravi (modified) https://commons.wikimedia.org/wiki/File:Panorama_of_United_States_Supreme_Court_Building_at_Dusk.jpg