Political views aside, does this not sound like reregulation of the industry to anyone else? It also says that the unions are in favor of this? Is this a true statement?
MetjetCEO From United States, joined Jun 2007, 122 posts, RR: 0 Reply 2, posted (3 weeks 2 days 6 hours 20 minutes ago) and read 4757 times:
If reregulation is used to generate funds for special projects (GPS Control systems, etc.) I assure you the benefits will not be going to the Unions. In fact, you could argue that regulation will eliminate the flexibility needed by companies and severly hamper the work environment as yet another layer of management is placed in between the employees and the airline managers.
MetjetCEO From United States, joined Jun 2007, 122 posts, RR: 0 Reply 3, posted (3 weeks 2 days 6 hours 17 minutes ago) and read 4742 times:
The other thing to remember that deregulation brought about the great companies that are benefiting travel today, and though some great players are gone due to deregulation the industry is much healthier than it was in the past. If the airlines cant survive in a competitive environment...they should not be in operation to begin with.
I would gladly take my chep fare on a self sufficient airline than pay 3-5x as much because a company cant manage their finances and traffic flows.
Cubsrule From United States, joined May 2004, 13620 posts, RR: 14 Reply 4, posted (3 weeks 2 days 5 hours 24 minutes ago) and read 4643 times:
Quoting MetjetCEO (Reply 3): the industry is much healthier than it was in the past.
By what measure?
Quoting MetjetCEO (Reply 2): If reregulation is used to generate funds for special projects (GPS Control systems, etc.) I assure you the benefits will not be going to the Unions.
No - unions, I assume, hope that that is a first step toward some sort of fare regulation, which would benefit them.
Flighty From United States, joined Apr 2007, 4528 posts, RR: 2 Reply 5, posted (3 weeks 2 days 5 hours 18 minutes ago) and read 4625 times:
Just imagine if the Detroit auto industry hadn't taken ANY government bailout money, but still restructured and produced more goods than ever.
That's what the airline industry has achieved. The airline industry is a big success for America. Near zero bailouts. Bankruptcies occurred but guess what, the industry is doing its job safely and in the genuine capitalist environment. Businesses do fail, and it's not a government problem when they do. It is a private problem.
This means nobody was taxed to fund the airlines. It means services are everywhere the consumer wants them. To reregulate would be crazy. If anything, the airline industry suggests that bailouts are totally unnecessary (in my view, the banking / TARP was protecting bad businesses in the name of "stabilization" in the form of giant tax pools flowing to certain people.
Airlines showed that capitalism's backside (bankruptcy) can work in an orderly way and keep people employed, keep an industry working. They even tolerated the financial crisis more or less intact!
DocLightning From United States, joined Nov 2005, 7386 posts, RR: 50 Reply 6, posted (3 weeks 2 days 5 hours 11 minutes ago) and read 4606 times:
Quoting MetjetCEO (Reply 3):
I would gladly take my chep fare on a self sufficient airline than pay 3-5x as much because a company cant manage their finances and traffic flows.
I keep hearing about the massively increased fares that regulation would cause.
Now, does anyone know how average fares have changed since regulation? Not the absolutely cheapest, rock-bottom, six-months-in-advance-on-alternate-Tuesdays-when-the-moon-is-in-the-house-of-Aires fares, but average fares.
N911YX From United States, joined Mar 2006, 116 posts, RR: 0 Reply 7, posted (3 weeks 2 days 2 hours 58 minutes ago) and read 4520 times:
Quoting Ikramerica (Reply 7): Now, does anyone know how average fares have changed since regulation?
Anecdotally. My Dad flew from SFO-PIT on TWA in 1971 with a 2 day advance purchase and paid $586 r/t. Adjusted for inflation that's a small fortune.
In 1980, post deregulation, I flew SFO-MCI-JLN two-day advance notice with a return reroute JLN-SGF-FYV-FSM-DFW-SFO and paid no more than the original $500 r/t ticket. Again, in 1980 dollars that was quite a small fortune.
I can still fly MCI-SFO-MCI regularly for less than $229 with a week's notice.
I don't see re-regulation coming back without further diminishing business travel. The Feds will demand carriers reduce "deep vein thrombosis" by forcing them to widen seating and pitch length. Fewer seats - fares go up. Meals for all - fares go up, Fares go up - pax counts go down.
Tdscanuck From Canada, joined Jan 2006, 5707 posts, RR: 56 Reply 8, posted (3 weeks 2 days 2 hours 42 minutes ago) and read 4501 times:
Quoting MetjetCEO (Thread starter):
Political views aside, does this not sound like reregulation of the industry to anyone else?
It does not sound like reregulation to me. The airline industry is already heavily regulated, it sounds like they want to tweak the existing regulations. "Reregulation" in the sense of going to the pre-1970's business model seems incredibly unlikely.
Quoting Cubsrule (Reply 4):
Quoting MetjetCEO (Reply 3):
the industry is much healthier than it was in the past.
By what measure?
Safety, cost, number of destinations served, flight frequency, accessibility...
Quoting DocLightning (Reply 6): Now, does anyone know how average fares have changed since regulation? Not the absolutely cheapest, rock-bottom, six-months-in-advance-on-alternate-Tuesdays-when-the-moon-is-in-the-house-of-Aires fares, but average fares.
I believe the average has stayed rather constant in numeric dollars. That means, when you account for inflation, it's been getting steadily cheaper.
Kellmark From United States, joined Dec 2000, 569 posts, RR: 8 Reply 10, posted (3 weeks 2 days 55 minutes ago) and read 4409 times:
This whole thing will be about saving union jobs. Just like the auto industry.
The "popular" way to guarantee jobs has been to "bailout" the large legacy companies (carriers). But the government could still limit competition and have nearly the same effect.
They could limit new entrant carriers, or create a "floor" fare which no one can go below. Or even limit certain routes.
The problem with all of this is that if you abandon the free market, it creates a larger problem than you had before. Note the Auto industry and what a disaster that is. GM will always need more and more taxpayer money. They have never met any of their targets.
Even better, just look at Amtrak. Billions of dollars a year for a failed enterprise, which subsidizes a few at the expense of the many.
To save a union job, all of us will pay a very high price. Higher fares, fewer choices. And higher taxes for the rest of us. Once you intervene in the market, logic is removed and politics replace it.
Companies would no longer seek to make profits by being productive, efficient, and effective. They would become pure lobbyists in Washington, just like the auto companies, banks and apparently soon, health care companies. Its a disaster in the making, just like the rest of the government intervention.
The airlines are in big trouble because demand is way down, especially business travel. Because the economy is in the tank. And this will continue as the Obama administration continues its statist high spending high tax policies, No business is going to invest in the future or hire anyone back in this terrible environment. But this administration's response to every problem that it creates is simply more state intervention. It is a deepening spiral. But the airlines would recover, along with the rest of the economy, if the government drastically cut spending and slashed taxes. Business would respond and the economy would recover. But that is not the Obama ideology. They are doing exactly the opposite, with the health care trillion dollar boondoggle and cap and trade which will double energy costs and the union card check, which seeks to unionize nearly every business in the country, all of which will hurt business, create more unemployment and raise taxes.
It is interesting that the airlines/unions are going to the same people that have caused the problem to get help. But if the government intervenes in the airlines,like they have in other industries, it is going to cost the rest of us big time.
Planemaker From Tuvalu, joined Aug 2003, 3820 posts, RR: 22 Reply 12, posted (3 weeks 1 day 22 hours 29 minutes ago) and read 4293 times:
Quoting Cubsrule (Reply 1): Why wouldn't they be? Deregulation has resulted in a massive wealth transfer from labor and investors to passengers.
It wasn't full deregulation... and that has caused the problem. There are simply too many airlines, and legislators make it extremely difficult to merge airlines.
Tdscanuck From Canada, joined Jan 2006, 5707 posts, RR: 56 Reply 13, posted (3 weeks 1 day 21 hours 29 minutes ago) and read 4235 times:
Quoting Jetfuel (Reply 10): A system where airlines are again forced to compete on service to customers - YES
They do that now. Customers have *very* clearly demonstrated exactly how much they value service by the airlines.
Quoting Cubsrule (Reply 12):
Quoting Tdscanuck (Reply 9):
Safety, cost, number of destinations served, flight frequency, accessibility...
And which of those tells us anything about financial health?
None...but financial health of an *industry* is meaningless. You've got some carriers that are fine and some that are financial disasters. The problem isn't the marketplace...that's worked just fine to delivery exactly what it's supposed to. The problem is that we don't let the companies die off who *can't* deliver a healthy service and be financially at the same time.
John From United States, joined Sep 1999, 1303 posts, RR: 8 Reply 14, posted (3 weeks 1 day 13 hours 33 minutes ago) and read 4144 times:
If the "average" consumer truly values full service amenities, then they should be willing to pay for it. In today's environment, all the customer cares about is cheapest fare, period. What kind of service do you expect on a $69.00 fare? Safe, convenient and reliable transportation. That's all anyone should expect. Nothing more, nothing less.
Brilondon From Canada, joined Aug 2005, 1507 posts, RR: 0 Reply 15, posted (3 weeks 1 day 12 hours 59 minutes ago) and read 4116 times:
Quoting MetjetCEO (Reply 3): I would gladly take my chep fare on a self sufficient airline than pay 3-5x as much because a company cant manage their finances and traffic flows.
Unfortunately people still expect the same service levels for the lower fares but of course that is not the way it works. Deregulation has led to choice in the market place that is good. The choices though are still controlled by Government by airlines having to apply for routes and in Canada the Government still controls a fair bit of the industry by not allowing foreign airlines to compete domestically with in Canada there by giving only two choices within Canada. This is bad. No choice, high fares.
Having low expectations means you won't be disapointed.
Kalvado From United States, joined Feb 2006, 204 posts, RR: 0 Reply 17, posted (3 weeks 1 day 12 hours 32 minutes ago) and read 4089 times:
Quoting Tdscanuck (Reply 14):
They do that now. Customers have *very* clearly demonstrated exactly how much they value service by the airlines.
Services may be different. on-board amenities are an easy way of selling "service", but what about real ones? Improve travel, not travel experience.
Just for example, service may mean different priorities for different flights in / out of busy hub.
Some, like Mir, would like 30-minutes intervals on a route, with flights running 2 hours late. some may settle with 3 flights a day, with flights having guaranteed slots for harsh weather conditions. Mix those, and see if pax would choose congestion or price. It's not overpriced sandwiches, it's something real.
I don't think anyone tried that, since current airport regulations make it impossible. But we're talking about changing rules, so why not?
2175301 From United States, joined May 2007, 634 posts, RR: 0 Reply 18, posted (3 weeks 1 day 11 hours 26 minutes ago) and read 4046 times:
I would not support a return to the old regulated airlines of the 70's and 80's.
The biggest change needed to ensure profitable companies in the US is a change to the bankruptcy laws to limit the number of companies that can do a Chapter 11 reorganization. If about 1/2 of the companies that enter Chapter 11 were forced to shut down and liquidate (Chapter 7) then the entire industry (and many industries) would in fact be in better shape. It would eliminate the worst decision makers and the most uneconomical airlines. It would sharpen investors and lenders focus to avoid risk in saturated markets. It would force a company in trouble to take actions a lot earlier than currently.
The second change needed is a change in the tax laws that focus the Board of Directors and Investors on 2-3 year profitability instead of "this quarter's performance"
As far as the airlines: I would support regulations that would ensure you had a well rested crew and allowance for naps during cruise.
PanAm788 From United States, joined Sep 2008, 125 posts, RR: 0 Reply 20, posted (3 weeks 1 day 9 hours 21 minutes ago) and read 3847 times:
I guess I'd say that I'm for either one government funded flag carrier (like LH, EK, etc) or a completely deregulated market. Since America is a bit too large of a market for one international flag carrier, I support a free market system. IMO, a government reregulation would cause a lot of problems.
1. What about carriers that get the majority of their money because of their low fares (SW)?
2. The amount of money needed to please the current private investors would be mind blowing.
3. I think overall, service would go way down on domestic flights, though perhaps not international ones because domestic carriers would have little or no competition on domestic routes.
I think the idea that the glory days of TWA and PanAm would return with regulation is just pure optimism.
I would disagree. DL, in becoming a "World Airline" is much more likely to try to offer a product more like EK's and SQ's without raising fares. If DL and NW didn't merge, DL and NW would attract basically only Americans who flew on them for convenience (low fares, frequent flier programs, etc). Now they wan to keep that level of convenience as well as making themselves attractive to the world.
Manfredj From United States, joined Mar 2007, 851 posts, RR: 0 Reply 21, posted (3 weeks 1 day 9 hours 9 minutes ago) and read 3803 times:
Quoting MetjetCEO (Thread starter): Political views aside, does this not sound like reregulation of the industry to anyone else? It also says that the unions are in favor of this? Is this a true statement?
It's VERY hard to take politics out of the equation here. This could spell disaster for the industry. (and no it's not in bad shape already) The government will use any excuse it can to gain more control of this industry siting "greenhouse gas emissions" or a revamp of the ATC system in order regulate the industry.
We're talking about a government who took over Amtrak, which hasn't made a sustainable profit since....imagine what they would do the airline industry. The post office, DMV's and basically anything else the govenment touches is riddled with too much regulation, unions and politics which hurt our industry.
Leave the airline industry alone. That means you need to take a truly capitalist approach and stop bailing out the weak airlines. Let them go and this will enable the stronger ones to grow and make a profit.
Cubsrule From United States, joined May 2004, 13620 posts, RR: 14 Reply 22, posted (3 weeks 1 day 8 hours 9 minutes ago) and read 3561 times:
Quoting PanAm788 (Reply 21): I would disagree. DL, in becoming a "World Airline" is much more likely to try to offer a product more like EK's and SQ's without raising fares. If DL and NW didn't merge, DL and NW would attract basically only Americans who flew on them for convenience (low fares, frequent flier programs, etc). Now they wan to keep that level of convenience as well as making themselves attractive to the world.
It's great for the airline that merge. The issue is that it isn't good for the industry.
Quoting Manfredj (Reply 22): We're talking about a government who took over Amtrak, which hasn't made a sustainable profit since....imagine what they would do the airline industry.
To be fair, the government took over passenger rail because it wasn't making money.
PanAm788 From United States, joined Sep 2008, 125 posts, RR: 0 Reply 23, posted (3 weeks 1 day 7 hours 38 minutes ago) and read 3466 times:
Quoting Cubsrule (Reply 23): It's great for the airline that merge. The issue is that it isn't good for the industry.
Well since they want to increase their service and keep their low prices and convenience, assume they succeed to some level, and other airlines have to follow to stay competitive, and sooner or later, all airlines have increased service, low prices and good convenience
Sure the competition is upset that they need to spend money in order to remain profitable, but in the end, the best will win, and the customer will be happiest. How is that bad for the industry?
Just because there's a goalie doesn't mean you can't score.
N1120A From United States, joined Dec 2003, 23588 posts, RR: 89 Reply 24, posted (3 weeks 1 day 7 hours 30 minutes ago) and read 3449 times:
Quoting Flighty (Reply 5): The airline industry is a big success for America. Near zero bailouts.
Um, do you remember the post-9/11 bailouts?
Quoting Jetfuel (Reply 10):
A system where airlines are again forced to compete on service to customers
The airlines do compete on service. The problem is, customers are too often unwilling to vote with their wallets and either 1) not fly or 2) not look past the basic cost of the ticket to all the ancillary costs (this is even worse in Europe).
Quoting Planemaker (Reply 13): There are simply too many airlines, and legislators make it extremely difficult to merge airlines.
1) The anti-trust laws exist for a reason. To protect capitalism and market efficiencies.
2) Who says there are too many airlines? These airlines can make money if they want, they just steadfastly refuse to shape their product based on actually successful models and try to nickel and dime their way to profitability instead.
Quoting PanAm788 (Reply 21): I would disagree. DL, in becoming a "World Airline" is much more likely to try to offer a product more like EK's and SQ's without raising fares.
Not really. US airlines are different than their foreign competitors. Most of their business comes from the massive domestic market, which then also drives their international traffic.
Quoting Cubsrule (Reply 23):
To be fair, the government took over passenger rail because it wasn't making money.
Not to mention the fact that the freight railroads set up Amtrak to fail and have been nothing but an impediment to its progress. Personally, I think all rails should be either federalized or taken over by the states, in the way highways are.
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
PPVRA From Brazil, joined Nov 2004, 6091 posts, RR: 48 Reply 25, posted (3 weeks 1 day 7 hours 7 minutes ago) and read 3361 times:
To reduce congestion, privatize and fully deregulate (you can keep safety regulations) major congestion centers: all NYC area airports, Chicago airports, and Los Angeles airports (even general aviation airports). This will have a major impact on the industry and congestion.
Short of that, fixing how airlines are charged for using airports should help a little bit. I don't know how all airports charge airlines, but a flat, fixed fees for all types of aircraft would be better than what we have now. This also means phasing out passenger facility fees.
I don't understand the safety argument from the article. Airline travel has never been safer.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
26 PPVRA: The interstate system gave rise to the car dependency culture and urban sprawl, which drove the pax rail companies out of business.[Edited 2009-11-14
27 N1120A: I completely disagree. Ports, including airports, are inherently governmental. Even the staunchest libertarians I know agree on this point. BAA's run
28 Manfredj: Yes but, arguably...consititutionaly, our government is not in business to take over companies that aren't making money, let alone whole industries.
29 PPVRA: I don't see why. I know of companies that avoid the port of Houston and prefer to use a nearby one that is privately owned because it is less delay p
30 Cubsrule: But the government created the problem by building interstate highways - so wouldn't leaving the railroads alone have unfairly favored the stakeholde
31 BMI727: But that won't be the case. Someone will see that and start a new airline. But don't get me wrong, both anti-trust laws and economic Darwinism are ve
32 Rampart: I believe more destinations were served in the 70s and early 80s. And there were more flights and choices for small and medium cities, and their fare
33 Planemaker: There are not even 5 economists that would say that mergers have hurt the industry. Forget about mainstream! Sorry, but it is politicians protecting
34 Cubsrule: Alfred Kahn - the architect of deregulation - has said it. I'll see if I can link you to something more concrete, but he has a decent general discuss
35 Planemaker: Sorry but the article does not support your assertion. This is what he said... The recent wave of mergers and airline failures has made the industry
36 Cubsrule: I believe it's from the mid-90s. He has repeated the assertion more recently; as I said, if I can find something both more concrete and more recent,
37 Planemaker: That is still "ancient" history as not only did LCCs not exist but neither did the "swarm" of RJs (now over 2000)... arguably the two things that cha
38 Rampart: I don't think this is true regarding the cities served. I posed the question in a thread last Spring Most Commercial Airports: What Era? (by Rampart
39 Cubsrule: What part of it is untrue? The aviation industry still largely escapes competition law scrutiny, many airports are still at or near capacity, and the
40 Planemaker: Somewhere there is a listing of the number of cities served which I can't locate right now. However, you just have to look at the travel numbers (or
41 Cubsrule: But the industry is perpetually bleeding red ink. That's the problem.
42 Planemaker: Precisely because there is too much competition. Hence, industry consoliation is what is required.
43 Cubsrule: Consolidation like TW and OZ? All consolidation isn't created equal. That's why Kahn et al argue for more vigorous enforcement of the antitrust laws.
44 Planemaker: Obviously regulators should never allow mergers among the top two carriers but, having said that, mergers that were unthinkable only 10 years ago hav
45 Flighty: I still say the airline industry is a big success. We should be glad today that we have about 300 cities served today, in the worlds largest airline s
46 DAL1044: If and when the US Government steps back in to regulate Airlines I will never fly again. Speaking from experience I've seen government regulation dest
47 Tdscanuck: They're under huge scrutiny...they can't even change frequent flier system alliances without begging with the government. Yes. Enourmous competition.
48 Lightsaber: Once upon a time the US had the most competitive auto industry in the world. Besides the big three, there was Packard (and its divisions) as well as
49 Planemaker: It isn't simply because it has not paid a return on invested capital. It already regulates airlines in so many ways. Furthermore, look at how CO (amo
50 Isitsafenow: The USA airline industy will ONLY be re-regualated IF Uncle Sam can find a way to make money for himself. In other words,'whats in it for me?" safe
51 PanAm788: Well sure, but DL is becoming so big that it will have to try to take EK & co. on if it wants to get international markets, but it also has to keep t
52 DAL1044: I couldn't agree more. Goverment intervention causes more problems not less. Carriers that have failed such as TWA, Eastern, Braniff just to name a f
53 Cubsrule: ...or no profits, in some cases. When was the last time UA or US turned a profit? Yes, precisely. The lower prices have largely come at the expense o
54 Flighty: Very right. 100% agree with your read on that. Probably 2006... not very often, that is for sure. Airlines may not make a lot of money (that's for th
55 Cubsrule: What if investors wise up and quit giving them money? You seem to feel that airlines are a public good...
56 SCCutler: This "lower fares at the cost of labor" line is utter and complete buncombe. The most successful airline in the industry is heavily-unionized, its emp
57 Flighty: It has happened before. It's never created a real public problem. The airlines do a very nice thing for the public, and I don't see it ending anytime
58 LTU932: Just to point out, LH is NOT a government funded, nor a state owned carrier since 1997, when they became fully privatised.
59 Rampart: Did you mean decrease by 45%, corrected for inflation? If it actually did increase 45% in that 14 year period, as the industry has consolidated, that
60 AirNz: Not exactly....the competition is so fierce because the carriers are only concerned with chasing 'market share' even if the route is loss making, ins
61 UALWN: Uh? The USA airline industry got LOTS of government bailout money (or whatever you want to call it) post 9/11.
62 Tharanga: It ended up being a lot smaller than advertised. US, F9 and HP took government aid. As did ATA and Aloha. UA asked for it, but was rejected. The loan
63 PPVRA: Utilities are some of the most highly regulated industries in the world. So is telecom. With this in mind, you could say regulation leads to bigger a
64 Cubsrule: You have the cart before the horse there. Most utilities are (and, historically, all were) natural monopolies even without the cost of compliance wit
65 MSNDC9: Privatization will do nothing of the sort. Capacity expansion will. There's nothing wrong with the way airports chareg fees. As each year passes, air
66 AirNz: I certainly have to disagree with your gross, and very inaccurate, generalisation. "Full service amenities" are there for anyone willing to pay for a
67 Cubsrule: If it's the same product, sure. But if it's not the same product, the question gets harder. Certainly, everyone doesn't drive a Kia; people drive mor
68 Tharanga: I agree that there is a big gap, although on short-haul in the US, the premium cabins aren't all that premium. But if there were some way to profitab
69 Cubsrule: I think that's right. To the extent that there isn't money to be made, though, it's because of a lack of enough demand, not a lack of demand period.
70 AM744: It's nearly impossible to profit from a high risk, high tech, highly regulated (regarding safety and operational standards) industry. Airlines are ra
71 Tharanga: I don't see why that should be true. Plenty of profit in pharmaceuticals, which is probably higher in each of those things. The idea that there is to
72 BMI727: Really I think that there aren't many good reasons other than love of the game so to speak. Bob Crandall for one knows the score, as does Richard Bra
73 DocLightning: WN does a lot more than that. WN also keeps its customers happy by keeping its employees happy. This means that a trip on WN gives me an experience w
74 Planemaker: My mistake. Yes, I should have put decrease! There are more airports served... I just wish I could remember the link with the data. Obviously there i
75 Cubsrule: UA international F versus UA Y? How many city pairs have three or more carriers flying RJs?
76 Rampart: When you do think of it, please post it, or send me an IM. I am curious, it would answer the question I posed a few months ago. I counted 380 +/- "pr
77 PPVRA: Can you give me examples? I'm not so sure, I've seen some pretty horrendous results of poor regulations. To the point I might prefer to live under a
78 Commavia: It's very simple. If we as a country want to go back to an era in which air travel is more expensive and unaffordable for a not-unsubstantial segment
79 MSNDC9: Totally untrue. Congestion pricing at 5 or 6 of some 300 airports with commerical air service will not make a dent in relieving congestion - don't bu
80 PPVRA: I doubt it wouldn't work, given that a huge chunk of the delays start out at these few airports. However, preferably, all airports would be privatize
81 Lightsaber: Exactly. And the first two are often the ones I choose to fly. 100% agree. I would add that regulation would also make the US airlines bloated and la
82 MSNDC9: There are no such caps. Airports charge what it costs to own and operate and fund facilities. The most prevalent models actually do fluctuate with su
83 DocLightning: It's not so simple. Regulation isn't always bad. Regulation is why air travel is so safe, for one thing. There are ways to do regulations to improve
84 Commavia: Who said it was? I didn't say that all regulation was always bad. But, regulation does always increase cost over the long-run, in the macro sense. I'
85 PPVRA: Something more like this: http://www.91expresslanes.com/ Is what I am proposing. If it sounds expensive to you, then people are going to find ways ar
86 Cubsrule: Telecommunications is the classic one. Electric is close if you have a utility that transmits only, as is natural gas. Water and sewer are similarly
87 PPVRA: Both Telecomms and Electricity were around for very short amounts of time between those technologies first appearing and then being regulated. And if
88 Commavia: It would do precisely the opposite. This is Economics 101: putting a price ceiling on tickets would artificially constrain the fare that airlines cou
89 Cubsrule: I'm not arguing that it's a good idea - just throwing out an example of regulation that might not have anticompetitive effects. ...but that doesn't a
90 Planemaker: Huh? Now you bring up the same airline. That has absolutely no relation to your Kia/BMW analogy. The cities that have the congestion problems, like B
91 Cubsrule: Yes - it's not a widespread problem. Outside of BOS-NYC-WAS, I can't think of a single city pair that is overrun by multiple carriers' RJs. You said
92 Commavia: Price discrimination has nothing to do with it. If you artificially prevent airlines from pricing their product at a profit, what - exactly - do you
93 Cubsrule: If you prevent them from pricing at a profit, they will cut capacity. It is not at all clear, however, that that will happen if you cap profit margin
94 Lightsaber: I'm not into price ceilings or floors. Why shouldn't an airline be allowed to sell seats below cost if that is the only revenue they will receive? A f
95 PPVRA: Here's why I disagree: if every industry was like that, there would be no venture capital. We'd recycle funds back into the same things, and there wo
96 Commavia: But what if one airline can afford to maximize that "acceptable" profit in a given market and yet another airline in that same market could charge a
97 PanAm788: DL is now flying scheduled flights all over the world to huge business destinations. For example, I'm pretty casual American fliers aren't flocking t
98 Cubsrule: I'm not arguing that any of these is a good idea - I'm just imagining regulatory schemes that might increase competition and/or reduce prices. It's n
99 Planemaker: Every major airport is "overrun" by RJs (certainly in terms of domestic flights). Airport data from Innovata shows that RJs account for the top or se
100 Cubsrule: Airlines, by and large, only bifurcate the service. That was my original point. You rejected the analogy for reasons I don't really understand, but i
101 Commavia: Yes it is. Huh? Pharmaceuticals in the United States would cost literally tens of billions less - at least - each year to the collective American pub
102 Cubsrule: So there is no competition between, for instance, Lipitor and Vytorin?
103 Flighty: That's not a very good example because nobody pays the list prices for drugs anyway. So no, it's not really a market. To the extent that the drug mar
104 Planemaker: Everyone knows that the majors offer Y and F domestically... so what is the point. And the difference between Y and F isn't like the difference betwe
105 Tharanga: I understood the point in the very beginning; it's pretty simple. There is bare-bones, a la carte Y, and then F. Somebody else was complaining, sayin
106 Cubsrule: So it's like airfare, then? The idea that patents mean that there can be no competition in an industry is ludicrous. If it were true, there would be
107 MSNDC9: Actually, a smaller mix index increases the operational throughput capability of an airport. You start swaping out the RJs for larger aircraft your m
108 Cubsrule: But if you swap 30 CRJs for 10 320s, the throughput decrease isn't enough to cancel out that effect.
109 Tharanga: It could slightly increase labor costs (you might need more pilots), and thus you could say it'd be an incremental increase in the barriers to entry
110 MSNDC9: But you can't operate those A320's economically so your point is moot. There's nearly 22% fewer scheduled operations today then there were in 2000 so
111 Cubsrule: I think that's right (and you are absolutely correct that abstract questions deserve abstract answers). But I have a hard time foreseeing any real ef
112 Tharanga: As you've noted, no airline is going to reduce frequency on its own. It's a sort of tragedy of the commons, and slots alone didn't fix it. Slots for
113 Cubsrule: That's actually the one piece of the puzzle I'm not sure about. AA had a recent, well-publicized desire to retire some of its LGA slots - had that be
114 MSNDC9: Its called a free market, and as I've pointed out, placing a premium on slots in a small handful of markets does little to deter a carrier that calcu
115 Tharanga: A good summary. Nobody is allowed to skimp on safety, and some minimum level of service (some compensation for involuntary bumping, stuff like that).
116 Cubsrule: No - that was the point. AA wanted them dead and gone. Without that option, AA kept them.
117 Tharanga: I'm with you. If the slot could be simply retired into non-existence, then AA would have let it. But if it would have been picked up by a competitor,
118 MSNDC9: That creates even less of an impact because they would only apply to the peak hour, typically 2-4 hours a day. This is how slots are handled today an
119 Tharanga: How could that possibly be true? If the number of slots available is low enough, you get the exact impact you are looking for. You can't say slots do
120 Cubsrule: ...and LGA is chronically congested and DCA is not. Coincidence?
121 MSNDC9: No coincidence at all, but they aren't going to change the model for LGA so the answer isn't with the slots or remove gates from service so they can'
123 MSNDC9: If you think you can operate an A320 to a small market in lieu of an RJ, then go for it. You'll be done in about a week.
124 Cubsrule: Why is removing a relatively nice facility superior to reducing the number of slots?
125 MSNDC9: Because no one is going to change the slot formula.
126 UALWN: What was being discussed is replacing, say, six RJs in a single route (yes, there are many routes with several RJ trips per day) with two 320s. That
127 MSNDC9: No, its not whats being discussed. The discussion is the extensive use of RJ's in the market causing congestion - which is a bunch of bull by the way
128 Cubsrule: CLE-LGA is too small for a 320? RDU-LGA is too small for a 320? ...and no one is going to knock down the MAT. What is your point?
129 DocLightning: Is that why UA has used CRJ's on IAD-JFK? By golly, you're right! The DC-NYC route is *way* too small for an A320! The reason the RJ's are operating
130 Tharanga: Until they do. So you admit changing the slot formula would work; you're simply saying the Port Authority or whoever wouldn't be able to force the ch
131 UALWN: Yes, it is. Please, read again posts 74,75,77,90,91,99, etc. Nobody is complaining about a lonely RJ flight a day between, say, ORD and EAU, which co
132 Tharanga: Ha, I was writing the same thing, then stopped as I'd figured somebody else would beat me to it. I think the task should be to map out LGA's capacity
133 UALWN: I wasn't as smart as you, and now my post 131 comes after two other people have said the same (and better!). Oh well...
134 MSNDC9: Says you. If it was not appropriate, then they wouldn't use it would they? In most cases, yes. Don't you think that if the demand were there this wou
135 Mrocktor: Aviation is massively, heavily, suffocatingly regulated at every level imaginable. * Aircraft design is massively regulated. Both design standards an
136 MSNDC9: Some people are unable to come to terms with this issue. Even those airports out there that are under private operation still have a government board
137 Cubsrule: ...which has not a thing to do with whether or not they are natural monopolies. Natural monopolies are defined by their cost structure, not the way t
138 MSNDC9: Depends upon how many ways to get there exist in alternative to the non-stop. If there was only one carrier, you'd have a point. But there isn't just
139 Tharanga: You've forgotten the whole point of the discussion. Yes, airlines find it more profitable to use high frequencies of smaller planes on some routes. T
140 Cubsrule: In May, 2009 (most recently-available data), AA carried 512 PDEW (and offered about 630 daily seats) on NYC-RDU. How, exactly, is that too small for
141 MSNDC9: You're over simplifying the issue. When is a plane too small, when is it too big? How much flexibility does the market demand in terms of frequency?
142 Cubsrule: No, I want BETTER regulation. All three of the New York airports are regulated and will be for the foreseeable future (the same is true for the indus
145 MSNDC9: At the core of deregulation is the right of a carrier to schedule. You want to strip away the right of a carrier to schedule. You take that away and
146 Tharanga: Not in the least. Far from it. The carrier can schedule whatever it pleases. So long as it does not exceed the capacity of the airport. That is the w
147 UALWN: See reply 139. Probably they are not all stupid. And, yes, I am "some sort of genius". Thank you, but so far I kind of like my career as a particle p
148 Cubsrule: Here's a sensible scheme for dealing with LGA: Set the number of slots at the IFR arrival rate Permit incumbent carriers to retire slots at will, twe
149 Mrocktor: There may be certain services where under certain conditions, during a certain period of time, a monopoly is the most economically efficient entity.
150 NorCal: How do you think Aviation maintains such a good safety record? The second you remove government regulations on the design of regulation we'll have mu
151 MSNDC9: Which begs the question... What does that make your view on this matter? I'd say DOA. Then you should stick to your day job. That would require re-re
152 Mrocktor: What this means (if it were true, which it may or may not be) is that as a whole society is not willing to pay the price of the current safety standa
153 AM744: Wouldn't a price floor be better? You can't sell below cost and flood the market with artificially cheap tickets to drive out competition. Weren't th
154 Cubsrule: Yes - the extremely low marginal cost it what makes the thing a natural monopoly. Those low costs exist because the grid is already in place. Industr
155 MSNDC9: Its the frequency of service that is getting the passengers, not th enumber of seats available. The legal one: http://www.law.cornell.edu/uscode/49/4
156 Cubsrule: Maybe - but how do we know that. You are arguing by assertion, aren't you? ...which isn't the one used in this thread (note the article in the origin
157 MSNDC9: Well, if it was seats they'd have four MD-80's a day wouldn't they? Its completely relevant. You're suggesting the exclusion of a class. A perimeter
158 Khobar: Before you know it we'll be left with PC Air and Apple, with PC flying 90% of the routes. Indeed, fewer and fewer passengers (-6.7% over last year) a
159 Cubsrule: No - they are using RDU at least partially as a place to park slots. What class is that? If there are 85 slots/hour, why can't WN get the slots it wa
160 MSNDC9: New entrants - anyone who wants a slot but can't get one. Incumbents are heavily protected. If they were, the loads would be aroudn 65%. Because they
161 Cubsrule: No. Let's say the market demands 600 seats and at least four frequencies. They could do 4 S80s or 12 ER4s. Both would serve the market equally well,
162 MSNDC9: Well, they aren't, so that must mean something. Then I guess your stuck aren't you? I just answered it. Try reading: [Edited 2009-11-18 09:57:36][Edi
163 Cubsrule: Yes - it means they have nothing better to do with those eight slots. I read it - but by allocation, you apparently mean slot allocation, even though
165 UALWN: I see. Do you have the power to forbid me to give my opinion in this forum? No? I thought so as well. In the meantime, please, have a look at this: h
166 LTBEWR: This is a dilemma. None of us want regulations that would make flying more expensive for anyone, yet we want rules that would increase costs. There is
167 Tharanga: Not stuck at all. A total re-auction of all slots would be the most logical way to go about it. First, compensate all the existing carriers at the ma
168 Cubsrule: Why don't you quit hiding the ball and just post the number? The only problem with this is that it's hard to know the market price beforehand, but ma
169 Tharanga: I've thought about this, and I agree it's hard to know. The last big bit of market pricing data involved a slot swap, between LGA and DCA, so that ha
170 Cubsrule: It would - but I wonder whether it's the least bad solution. I don't know. Your guess is as good as mine.
171 MSNDC9: 75 plus government mandated exemptions for small and medium markets. The whole world knows that, so I'm not sure what your point is. You're like a br
172 Cubsrule: The whole world apparently knows that. The whole world also knows that WN can't get more slots The whole world also knows that there are no more than
174 JRDC930: First off, i personally am strongly pro-labor, and pro-reregulation. I think air travel should be seen as a public good, and that for the US to functi
175 NorCal: So as long as the dollars keep rolling in to hell with safety? They teach ethics in business school for a reason so that businessmen and women don't
176 BMI727: Then why have we seen a proliferation of low cost carriers in places that deregulate the airlines? The fact of the matter is that if ever a monopoly
177 JRDC930: WRONG! Monopolies allow the company to squash any incoming competitor, why do you think so many start ups fail? SW and B6 are rare exceptions. Monopo
178 Cubsrule: I don't see how you get the 75 number out of there; that's why I was confused. I see 62 commercial slots per hour plus 6 "other" plus exempt operatio
179 BMI727: ...but there will always be exceptions. But many of them don't get squashed. Some get squashed, some screw up on their own, but some do it right and
180 AirNz: Absolute cobblers! If that's what you've allegedly learnt in two semesters at college could you then explain to me the concept and success of LCC's?
181 JRDC930: Do you want to rely on those"exceptions" to provide you with the only competition?? I dont. In the US can you give me example other than WN, B6, Airt
182 PPVRA: There is absolutely nothing positive that will come out of regulation. The only "good" regulation is the one that is based on supply and demand, which
183 JRDC930: Neo-classical economics, has been proven to be a failure. Look at where it lead the US...straight into a recession. Keynesian economics is a more rea
184 PPVRA: Fiscal stimulus is something Bush practiced, and is Keynesian. "Deficits don't matter" also stems from Keynes. Extremely low interest rates is someth
185 JRDC930: Look at most economics and history books, they will tell you the depression was a result of unresrticted and speculative investments; borrowing on cr
186 PPVRA: http://en.wikipedia.org/wiki/Holodomor Joseph Stalin isn't exactly a man known for power restraint. Sorry, but communism makes no sense. It's illogic
187 PPVRA: The FDIC removes all incentives from consumers to find a safe bank. This means consumers will not care about how risky the banks they use are, which
188 JRDC930: Thats irrelevant to this thread. Dont bring it up. I was talking about economics not social issues. I noticed you didnt adress my points about the fr
189 PPVRA: It certainly doesn't depend on another person's compassion, which is a good thing, since that can be extremely unreliable. I'll take a look, but I've
190 JRDC930: You have got to be kidding me....Like they have any incentive with out regulation not to act risky??? Give me a break. i didnt trail off...i simply s
191 PPVRA: Of course they do. But they also don't want to lose money, which means they have to have a balanced approach. If the company's stakeholders (for exam
192 JRDC930: Everyone won, the consumer, the employee, the airline, isnt that proof that derregulation broke it?
193 PPVRA: This article does a decent job at explaining: http://www.forbes.com/2009/11/03/air...-forbes-opinions-deregulation.html Emphasis on the ill equipped
194 Kellmark: How do you figure the consumer won? Load factors were far less, far fewer people could afford to travel, and there were fewer choices. Most of all, t
195 JRDC930: You have to protect the employee and the consumer. IMO the stock holder is last. Business failure leads to unemployment and unemployment leads to mis
196 Kellmark: I agree that consolidation can be anticompetitive and anti-consumer. That is why anti trust laws should be enforced so we don't wind up with a "Micro
197 UALWN: I'm afraid statements like this have been thoroughly discredited by the latest financial meltdown. I thought GM and the companies in the financial se
198 Mrocktor: And if you regulate the market into an actual monopoly, the technology is guaranteed to stay the same - because you have just locked the guy with and
199 Tharanga: And you're stuck because you're not going to see a drastic improvement in ATC in the near term. So nothing changes, for now. But your original argume
200 UALWN: Regulation in the US financial sector was a joke. Spain has suffered (is suffering) a real estate crises deeper than in most any other country. Yet,
201 Cubsrule: So there was no innovation in (heavily-regulated) telecom in the twentieth century? To be honest, I'm not sure it's relevant here. We can scream abou
202 SA7700: This thread has run its course and will now be locked. Any posts made after this post will be deleted for housekeeping purposes only. Rgds SA7700
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