Don't start an airline if you want to be rich

Unless you are the CEO, I guess.

From the American Government Accountability Office (pdf) comes this chart of revenue, expenses, and profit in the US aviation industry:

Revenue in the industry has grown almost non-stop for the last 40 years, but expenses have more than kept pace. Only for a brief period in the 1990s did it look like flying passenger planes might make money, but that was derailed by the 2001 crash. As Matt Yglesias comments:

Some things that work as technology don't work as a business model. The Concorde was like that. An engineering marvel that couldn't make money. But... basically the entire passenger aviation industry in the United States is like that.

It's worth remembering as well that international flight isn't much better. Most of the industry is dominated by nationalised (or recently privatised) prestige carriers which can't be allowed to go bust due not only to their stranglehold on their domestic markets, but also through simple national pride. What would be interesting to see is whether that's a cause or an effect.

After all, if the all-encompassing British Airways had gone bust one of the first seven or eight times it ought to have in a proper market, perhaps the rise of the low-cost carriers (who do in fact make a profit from flying planes) could have happened a bit earlier. Or maybe government intervention was the only thing which allowed the aviation industry to mature enough that anyone could make a profit at all.

(via Richard Layman)

A Lufthansa plane takes off from Frankfurt. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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