andrewducker | Interesting Links for 06-05-2020

Crossposts: https://andrewducker.livejournal.com/3888275.html

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There absolutely is a value to an organisation being in existance.

Personally, I don't think there is much value to me of the Virgin organisation compared to other organisations that could be saved with the same money. I think my view of the value of the Virgin organisation is applicable to enough people that it could form the basis of public policy.

1) Virgin as an airline don't do anything particularly special.

I think airlines fall in to 1 of three categories. Bloated national carriers, long-haul room for your legs carriers or short-haul budget. Virgin is a long-haul room for your legs carrier. It might have pioneered that category when it was set up but it's been copied pretty well. Budget airlines are moving in to long-haul flights. Virgin doesn't do much of anything that anyone else doesn't do. It doesn't appear to do what it does particularly well.

2) Airlines are moving towards being commodities. There are definately some special skills that airlines need (maintenance of planes and picking pilots spring to mind) but airlines seem to be becoming commodities. The dominant models are 1) a bus with wings 2) a nice bus with wings and champagne. Most long-haul airlines are clustered in to broad alliances. No airline seems to have unique access to networks of routes, or planes or pools of engineers or pilots. One airline going bust more or less, doesn't change the size and shape of the airline market.

3) Airlines were already in over supply

4) Virgin were already losing money

If Virgin go bust, assuming that by 2023 people are flying as much as they were in 2019, the planes worth saving will be bought by someone else, someone better at running an airline than Virgin are, they will hire the pilots and no-one will notice much difference.

Instead of the saving a genetic airline I'd rather put the money towards saving hundreds of family owned restaurants, pubs, cafes. Each one of them might not be doing something special but there is a specialness in having hundreds of choices and variation in choice, rather than just different chain restaurants. I'd rather put the money towards saving theatres and music venues and comedy clubs - all of which have some specialness that customers would miss and where the capital assets are not commodities. I'd rather save small local sports teams and community sports clubs which represent hundreds of years of social capital and shared financial capital and are routed in the community.

So, I absolutely agree that there is value in an existing organisation, but for me, I don't see much value in the existance of Virgin airlines.

And that's before we get to your other excellent point on the moral hazard of the ownership and control.

Virgin doesn't do much of anything that anyone else doesn't do. It doesn't appear to do what it does particularly well.

Just to play Devil's Advocate: the few times I've flown Virgin trans-Atlantic, I've been reasonably well impressed. I don't think their value-for-money is exceptional, but they seem to fall in an underpopulated niche of being *somewhat* more expensive and more comfortable than, say, BA or American, but still far below the price of business-class. That suits me rather well: I found the experience pleasant. For that reason alone, I might miss them a little if they went away.

That said, I can't argue with the economics here: as a sensible target of government support, they're way down the list...

I take your point. However they are already losing money operating in their niche - so they don't seem to be terribly good at it. I'd have more sympathy for them if they were profitable doing what they do other than for the pandemic,

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Interesting Links for 06-05-2020

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