As I peruse the blogs and message boards, I frequently read words like “monopoly” and “oligopoly” in reference to airlines. And those are the nice things. I did pretty well in college Econ, but I’ll stay away from preaching on the economic status of airlines. One thing I won’t stay away from is this – a lot of us had gotten so accustomed to airlines as quasi-public utilities without the quasi-public rate setting that we thought what was happening around us was normal.
A lot of people that I have a tremendous amount of respect for are having a difficult time transitioning along with airline companies. I actually had a friend of mine say to me that we need a bad recession, oil shock or some other calamity to put the airlines in their place. Really? It would be easy to say that I’ve consumed the airlines’ “kool aid” or am otherwise biased. Perhaps I am biased, but the only thing I think I’m biased about is that no company, be it an airline or a donut shop, owes me their profitability. They owe me a product that I decide to give them money for, and that’s it. If they’re not offering something I desire, I am free to walk away.
Most airlines are being managed like normal businesses, and that is a characteristic that is far past overdue. Sooner or later, something will test the new found discipline of airline managers, and how they react will be telling. Just as telling will be how those of us that travel react if this new “paradigm” proves to be the real thing.
-MJ, October 5, 2014
MJ it is not us putting airlines in their place it is the other way around. Niw that airlines have effectively eliminated real competition there us nothing to do but taje whatever they dish out or stop flying.r
Interesting points on both sides. There’s no arguing that inflation-adjusted airfares are at historic lows.
There’s also strong evidence that the major airlines are moving toward feudalism where they will only “compete” on a handful of routes. This was essentially US/AA’s merger argument: “We’re already not competing; let us not compete as a single company!”
But it’s also clear that in the current regulatory climate the airlines are pushing and prodding the lower limits of human dignity to smash more people into airplanes. They have created a fragile hub-and-spoke system that’s susceptible to catastrophic, cascading delays, and have refused to pay for the airport and airspace upgrades to support that system.
So do the airlines need to be “put in their place?” Hard to say. Maybe we should decided to regulate the minimum level of service that the airlines provide, and if that means higher prices, so be it. But it’s a complex decision.
You’re way too kind. Airlines, at best, are a necessary evil. They gave up any semblance to being “just like any other company” when they exploited….er, used the 9/11 tragedy as an excuse to plead for billions from the government (taxpayers). No loans for our precious airlines, just a gift of taxpayer money.
What have the airlines done to “reward” the US taxpayer largesse since 2001: higher fares, cuts in service across the board, cuts in staffing, cuts in schedules, smaller seats while jamming more seats on each plane. Yeah, thanks for nothing.
I don’t blame the airline execs. If some clueless (bought and paid for) Congress critter wants to give you billions of $$$, who wouldn’t take it? They are like way too many businesses in the US today. When the profits are flowing, it’s theres to keep. When their business tanks, they look to the taxpayer to bail them out. Privatized profit, socialized losses. A good scam if you can get away with it. Like I said, a necessary evil.
(Sorry for the rant)
Not a rant, RoloT, just a fair point about more of the story. There were loans too….or loan guarantees rather. On the other hand, if the government closes the air traffic control system to air traffic, why would the airlines be wrong to ask for reimbursement? Further, if the airfares weren’t high enough to cover the cost of providing service previously, why are we surprised that airlines are taking advantage of the opportunity to charge an amount that not only covers costs, but enables them to make a profit? Come to think of it….is every for profit company that provides service we want a necessary evil? I’m thinking cell phone providers now for some reason. 🙂