Quote:
Originally Posted by Scoop
True,
But an airline needs jet fuel to operate. An airline does not need hotels and car rental companies. So while there is some validity in your comparison there are some distinct differences also.
Scoop
Plus hotels and rental car companies actually compete fairly without an entire paper industry around them that bids them up and trades rooms and cars on paper dozens of times, marking them up as they go, so crackberry day traders can make big money contributing nothing to society. If anything, hotels and rental cars actually help the airline industry sell seats because as a rule their goods and services are very cheap and competitive. The only industry that has sprung up around them are low price clearing houses and last minute good deal services.
Compare and contrast priceline and many others to the massive day trader paper mark up crowd that's now threatening to cull refining capacity to put even more upwards pressure on gas.
This seems like a really smart idea in theory, if its done right. Even then, and especially if others follow suit, that could deal a big blow to at least the crack spread portion of the insane petroleum mark ups. If it does, even a well run refinery could appear to be a money loser at that point...but that's probably part of the goal. If it depresses the end price of jet-A to the point that the refinery itself isn't making money or even losing money, then by default we're getting jet fuel a lot cheaper.
Then it will be a constant struggle to stay the course because the quarterly bonus monger hatchet men will see an opportunity to get rid of an isolated paper loss on the balance sheet today for a nice quarterly result tomorrow and then back to where we are now with the over all gas manipulation mark ups. The same logic that says to pull flights out of any market you're not "making money on". While that sounds great, it puts you in the position that any competitor can seat dump/cherry pick anything in your network they want to and as long as it hurts your performance you bail. You have to stick to those markets, and sometimes even double down and make them bleed more, because to instantly submit and yield market share at a competitors discretion is exactly how today's cutsey start up LCC in endless growth mode with a massive fantasy order book ends up becoming tomorrow's SWA.
The refinery thing could be a good long term deal, if its done right, even if the nose of wall street doesn't like the perceived line item profit lines its snorting that quarter. Being done right is a pretty big if though.
10-18-2021
