There's something about "budget carrier" that makes me think customers have already been squeezed... and there isn't really anything remarkable that evil private equity can do.
Background: Apollo offered to take over the British (colorful) budget carrier easyJet, expected to close in March next year...
The board rejected the initial approaches, but a bidding war between Castlelake and Apollo kept pushing the price higher and higher. The premium was not something shareholders could easily turn down. Yet another major British company will disappear into the American buyout industry.
Evil knievel.
Decent summary:
its garish, bright orange planes never made it the most lovable of airlines. But it was reliable, safe and cheap, and, perhaps most of all, it carved out a space in the middle market, with neither Ryanair’s outright hostility towards its passengers nor the high prices of the traditional carriers. It was the airline of choice for much of the country, at least so long as the fares were competitive.
"The trouble is, this does not seem like a great time to be buying into the airline industry,"
lol, isn't that always the case? <insert famous Warren Buffett quote about his airline guy>
It can use its financial expertise to get better deals on aircraft, while there is plenty of scope for premium services, such as loyalty schemes.
OH NOOOO, NOT YOU GUYS AS WELL! (#1598593, #1598123)
Can't really cut costs, though... already "a pretty lean operation"; premium services sound cool to PE but, like, really? We are Europooreans, and this is declining Britain... unless you're planning p0rn (#1006594) or premier league offerings (#1495638) you're pretty screwed
it is hard to believe that many people actually want to pay extra for their weekend away, and, if they do, they are probably flying with British Airways, Iberia or Air France. Low-costairlines are, well, the budget option.
== takeaway of American private equity takeovers in Britain has been: customer always suffers
Loaded up with debt, and with an owner demanding a return on its capital, easyJet will start squeezing its passengers for cash. An extra bag will go from £30 to £40. Boarding with your kids will be another tenner, and a mid-flight sandwich will be eye-wateringly expensive.
no clue, article opened for me and I snagged a PDF
I'm all for charging passengers by the pound (bodyweight included). Why should I have to pay more for the fatties who also make my trip less comfortable when they spill into my seat?
Adjust for BMI; fatty tax on airplanes
Maybe people will workout and eat less to fly on the cheap!
perhaps the world's best public health effort ever... and all it took was some ballsy and ruthlessly greedy private equity firms?!
I can see it now
If I get my BMI within normal my flight will drop $500 if not I’m stuck paying $750 to fly to LA
There was an airline in the US that tried this briefly. You and all your stuff (as I recall) got on a scale and that determined your airfare. The backlash was immense and immediate, but I think they were onto something and could have weathered the storm.
Crowd health model but for flying!
No adjustments. Being a giant confers negative externalities too.