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Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 8:29 am

DL has decided to give triple miles to flyers on ATL-LAX/ONT/SNA. In addition, they offer another 2500 miles to members who sign up and then fly ATL-LAX at least once. Coupled with the 5 new flights on ATL-LAX, adding more seats than FL or B6 did, COMBINED, DL is definitely acting predatory on this route. DOJ should be taking notice, and I wouldn't be surprised to see FL and/or B6 file a lawsuit.
 
CLEfan
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 8:38 am

Is it predatory or just good business? DL is trying to keep their customers loyal to their product by offering incentives. I see nothing predatory in this. Now if they were offering the flight for $1, that might be another thing.
 
william
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 8:56 am

Thank you CLEfan.....hey kids its called a FREE MARKET! SWA would have done the same and does when a competitor comes into its backyard. Want to take SWA to court now?
 
ContinentalFan
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RE: Lufthansa Losing $50 Mil Per Week. No Take Ove

Fri Apr 25, 2003 8:56 am

It's not like FF miles are worth anything these days... But the five new flights... that may be a bit much. Funny how they don't seem to be slashing fares, though. Guess they can't afford to do that in this economic environment.
 
Guest

RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 9:02 am

>>SWA would have done the same and does when a competitor comes into its backyard.<<

Care to give an example where WN not just matched fares, but added more capacity than the competitor did, AND offered triple RR credits on the route.
 
travatl
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 9:06 am

LOL - AirTran only has to worry about filling up 324 seats a day, which they'll do with connecting traffic alone.....I've seen the bookings already...they're strong.

Sure it's a free market - but Delta now has to come up with over a THOUSAND extra passengers a day in a market that they already served, and doing so by giving away the farm, and destroying their yields. Doesn't sound predatory at all to me....just sounds stupid.

Travis
 
Guest

RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 9:09 am

It's pretty cutthroat - the problem I see with it is that the goal of it is to push Airtran out of the market. I agree with Travis though, it's just stupid on Delta's part.
 
goingboeing
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 9:23 am

Thank you CLEfan.....hey kids its called a FREE MARKET! SWA would have done the same and does when a competitor comes into its backyard. Want to take SWA to court now?

Any examples of anyone who "took on" Southwest in one of their markets? Vanguard started MCI-LAX service, and yes, SWA did offer some fare sales, but they didn't drop their fares and add flights only to reduce them later.

Offering triple miles isn't predatory...but adding all those flights - if Airtran or JetBlue wanted to put a hurtin' on Delta...pull their flights. If Delta suddenly drops those 5 extra flights, head on over to DOJ and file a suit, then restart the routes.
 
exusair
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 9:29 am

Why is it stupid?

The miles cost DL nothing. You can get miles just by getting a mortgage through a certain company or through get the AMEX card. Pay all of your bills with the AMEX card then send them a check for everything at the end of the month. They are flexing their marketing muscle.

SNA is underserved from the east coast. The existing flights are popular, so they add a frequency. ONT is underserved as well. ATL-LAX used to fly from 830am from ATL until 1130pm. 2 all night flights from LAX-ATL arrived at 5am and 7am. They still are not back to their pre 9/11 schedule witht hese additions.

LAX one of the busiest freight airports. LAX-ATL flights come in freight heavy, why not soak up some more of the demand? What were the frequencies between EAL and DL ATL-LAX? Why not compete with AirTran? Why not compete with JetBlue? Are any of you privvy to DL's costs for the ATL-LAX sector? What are their b/e points and revenue mixes?
 
goingboeing
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 9:35 am

All good points exusair, but IMHO, the goal of this is to force two little airlines out of that market. IF they do, and those freight laden flights are suddenly cut back - forcing heavier freight loads on the remaining flights - it's predatory...and predatory is stupid.
 
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EA CO AS
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 9:47 am

All good points exusair, but IMHO, the goal of this is to force two little airlines out of that market.

Couldn't the goal also just as easily be to build their market share or just keep market share from eroding?

It's my experience that when a major carrier does this, the knee-jerk reaction is for fans of LCCs to immediately cry that it's predatory, but when LCCs enter a market with lots of capacity and low fares, these hypocrites say it's just "good business."  Nuts

Of course, we can't let little things like facts get in the way, now can we?  Big grin

"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
MD88Captain
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 10:02 am

Just cry me a river.
 
goingboeing
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 10:22 am

All good points exusair, but IMHO, the goal of this is to force two little airlines out of that market.

Couldn't the goal also just as easily be to build their market share or just keep market share from eroding?


It could - if there was ever a big airline that maintained that capacity after a LCC was forced from the market

It's my experience that when a major carrier does this, the knee-jerk reaction is for fans of LCCs to immediately cry that it's predatory, but when LCCs enter a market with lots of capacity and low fares, these hypocrites say it's just "good business."

As I mentioned in my SWA/Vanguard example. Southwest didn't suddenly drop their highest fare to dirt levels, nor did they add a single frequency. When Vanguard pulled the route, Southwest actually added some flights after the fact. I suppose that is because they saw that there was some missed demand. That's 180 degrees different from what the big boys do. Since I live in KC, AA pops into my head...Against Vanguard they dropped their fares, and increased the MCI-DFW frequency to something like 12 daily flights. When Vanguard pulled DFW the first time, AA suddenly pulled back all that extra capacity. Seems to me that if one airline folds, that should open up some more demand and shouldn't result in a reduction in flights. That's why I say that if JetBlue or Airtran pulled the ATL-LA flights, just how long would Delta be happy with leading in "Market share" before reducing the number of flights?

Of course, we can't let little things like facts get in the way, now can we?

Sure can't...that's why I try my best to supply them to you Big grin

 
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 10:31 am

It could - if there was ever a big airline that maintained that capacity after a LCC was forced from the market

Sure can't...that's why I try my best to supply them to you

Your argument is flawed, since it's all based on what COULD happen with DL in the future, not what HAS happened. And since DL hasn't driven anyone from the market, the "facts" you supply don't exist in this case, only previous ones.

Believe it or not, "well, it's always happened before!" doesn't mean it will this time.

Nice try, though. Keep on spinnin'.  Smile/happy/getting dizzy
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
sllevin
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 10:34 am

So Delta's supposed to roll over and just go out of business?

Of course they are going to compete where they need to and not compete where they don't have to do so.

That's called "running a business."

Steve
 
Guest

RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 10:43 am

>>but when LCCs enter a market with lots of capacity and low fares, these hypocrites say it's just "good business."<<

1) It is definitely different when the LCC can actually make a PROFIT on the route.

2) Care to name me a real life example where the LCC added more capacity than the new airline on the route, offered triple miles, and dropped fares by more than 50% while having a -10% profit margin when a major or another LCC started flying the city pair?
 
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 10:54 am

Care to name me a real life example where the LCC added more capacity than the new airline on the route, offered triple miles, and dropped fares by more than 50% while having a -10% profit margin when a major or another LCC started flying the city pair?

The LCC IS the new airline on the route.

Care to show me your sources that cite DL having offering a -10% profit margin on the route? I'm sure the DOJ would love to hear from you if you can prove it.

What's that? You say you can't? Figures.

As someone else pointed out, are the major carriers supposed to just roll over and play dead for the LCCs? They have the right to defend their market share, and leveraging their advantages such as larger aircraft and frequent flier programs is just good business, not predation.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
goingboeing
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 10:56 am

Your argument is flawed, since it's all based on what COULD happen with DL in the future, not what HAS happened. And since DL hasn't driven anyone from the market, the "facts" you supply don't exist in this case, only previous ones.

Actually, what I said was this - IF Delta wants market share, more power to them. Herb Kelleher once said that he'd cede market share just as long as he made a profit. Winning the market share battle does not necessarily win the war. IF (notice I am emphasising IF) Delta simply wants to keep market share, they need to be careful...since if one or two LCC competitors leave a market, DL now has won the market share war. Now, they might even find themselves with excess capacity something that eats into those important profits. But...since they would "own" the market share, they could "trim" some of that excess capacity, but then the DOJ frowns upon that. So I suppose all I am saying is "Welcome to the market, Delta. Hope you stick around for a long, long time". If not...watch your back.

Happily spinning here in "thunderstorm alley"...GB
 
Guest

RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 11:46 am

>>Care to show me your sources that cite DL having offering a -10% profit margin on the route? I'm sure the DOJ would love to hear from you if you can prove it.

What's that? You say you can't? Figures<<

I'm saying a -10% profit margin in general. Now that I check the facts-1Q03 3.1B in rev, 426 million loss EXCLUDING one time items =-14% profit margin, 4 points higher than what I thought it was off the top of my head. Doesn't sound like an airline that should be cutting fares by 50% or more and adding almost 1,000 seats at these low fares.

>>Care to name me a real life example where the LCC added more capacity than the new airline on the route, offered triple miles, and dropped fares by more than 50% while having a -10% profit margin when a major or another LCC started flying the city pair?

The LCC IS the new airline on the route.<<

You don't get the point. A LCC will always operate at a low cost even on monopoly routes. When I switch the roles around, the LCC doesn't pull all of the predatory tricks that DL did on ATL-LAX. FL didn't add 3 more dailies when DL announced ATL-PHF or ATL-CAK, and offer triple A+ rewards on the route. They didn't even lower their fares.

>>As someone else pointed out, are the major carriers supposed to just roll over and play dead for the LCCs? They have the right to defend their market share, and leveraging their advantages such as larger aircraft and frequent flier programs is just good business, not predation.<<

Good(aka ruthless) business or not, it still violates laws in place to prevent an unfair playing field. A good fighter could beat the crap out of someone using their known techniques and muscles, but they will still get in trouble with the law for fighting.

Predatory practices wouldn't be a problem if Delta decided to offer triple miles on all routes, and didn't add tons of seats to ATL-LA within days of B6 and FL announcing service.
 
LV
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 11:59 am

Not to take sides here.....but anyone remember PNS?

How about DFW-ICT with AA and Vanguard
 
DCA-ROCguy
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 12:22 pm

Your argument is flawed, since it's all based on what COULD happen with DL in the future, not what HAS happened. And since DL hasn't driven anyone from the market, the "facts" you supply don't exist in this case, only previous ones.

Ah yes, the old "it hasn't happened yet in this instance" argument. Doesn't fly, EA. The pattern of Cartel carriers dumping capacity when a low-fare competitor who can make money on lower fares enters a route, then cutting capacity and hiking fares after driving the low-fare out, is well known. You're the one who's spinning, sir.  Smile

One of the Delta higher-ups told Aviation Week after FL and B6 announced service, that Delta is going to "flood the ATL-LA Basin market with capacity." That's pretty blatant.

One weakness in US antitrust law right now, is that FF miles aren't counted towards predatory pricing. The Sherman Antitrust Act needs to be stiffened with tougher, more specific guidelines including: 1) clear definition of capacity dumping, which the USA v. AMR judge noted was lacking; and 2) inclusion of FF miles in predatory pricing (and the definition of FF miles should include formulas to figure in number of destinations and fact of alliance destinations).

When Congress tried to stiffen the Sherman Act in 1999, the Cartel published outright lying newspaper ads about "reregulation" and bamboozled a lot of Congresspeople and local communities. Such guidelines are still needed. Maybe now with business in revolt against the Cartel's pricing practices and yields through the floor, Congress could try again.

Making money by having a low CASM is not predatory, it's good business. Making money by temporarily charging below cost to drive out a lower-CASM competitor is predatory.

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
 
jhooper
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 12:59 pm

There is nothing predatory about what DL did.
Last year 1,944 New Yorkers saw something and said something.
 
gigneil
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 1:12 pm

Actually, what DL is doing is the very definition of predatory.

The question is if its illegal or not.

They have to be operating the route at a loss for it to even be considered possibly shady, much less illegal.

N
 
bonanzaair
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 2:15 pm

Does it really matter any more what Delta does, the airline has begun the slow spin of water rushing down the drain just as the others (UAL, U, and soon AMR ) have before it. As Joe Leonard said "the recover is here, the days of $1000 business class tickets are gone"

Does it really matter any more what Delta does - JetBlue and Airtran are going to make money.

Bonanza
 
Delta737
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 3:04 pm

Good!

Competition is good, right? Everyone preaches the competition mantra when the underdog goes against the behemoth. But when the behemoth defends itself via matching fares or offering a good deal, people scream bloody murder.

Delta matching fares and offering a good deal is as predatory as Jet Blue servicing LGB to ATL at a competitive fare.... It's not.

Doug Taylor
jetcareers.com
 
Trvlr
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 3:14 pm

If what Delta is doing is "predatory", then what jetBlue is doing is awfully similar, except just called by a different name. Delta is only "predatory" because it's the dominant player. You can certainly call jetBlue's tactics "aggressive" as well as DL's. But who currently is or is not the dominant player in the market doesn't really matter in this situation, since FL or B6 are unlikely to be run out of business by DL. Both carriers' moves are in the end better for the consumer.

Aaron G.
 
Guest

RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 8:14 pm

>>Competition is good, right? Everyone preaches the competition mantra when the underdog goes against the behemoth. But when the behemoth defends itself via matching fares or offering a good deal, people scream bloody murder.<<

>>If what Delta is doing is "predatory", then what jetBlue is doing is awfully similar, except just called by a different name.<<

Delta737/trvlr: I don't see how JetBlue is acting predatory. They have made money on the same fare structure on other routes, and I can't recall any time that they ever added a bunch of capacity when another carrier came to the market. I have never thought that price matching was illegal, although I never liked it, but it is a way for the airlines to defend their turf. What I don't agree with is capacity dumping and offering huge mileage incentives that will technically by the airline's definiton of FF miles be unprofitable. Delta gets $228 for every r/t ticket. They say an FF mile is worth $.02. 3892 x3=11676 miles, or $233.52. While DL doesn't pay $.02/mile, that is what they consider them to be worth.
 
goingboeing
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Fri Apr 25, 2003 8:16 pm

Competition is good, right? Everyone preaches the competition mantra when the underdog goes against the behemoth. But when the behemoth defends itself via matching fares or offering a good deal, people scream bloody murder.

MAtching fares = competition = good.

MAtching fares and adding 5 new flights begs the question - if the demand were there, why wait until a low fare carrier starts a route to add those flights? Why not add those flights, make that money and keep that market share without being prodded to do so by a LCC. That looks a little fishy. If JetBlue or Airtran opened a route with 5 more flights than Delta was running, then there's a "predatory" aspect to that. They didn't. Now comes the "if" part - if for any reason JetBlue or Airtran pull the route, then Delta has sort of boxed themselves into a corner - if they pull routes and raise fares to "modify demand", then the government is going to look at their actions as predatory. If they pull the flights and keep the fares at the level that they are at - the wouldn't have a problem. So Delta had best plan on keeping the additional flights AND the lower fares for quite some time.
 
rumorboy
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Sat Apr 26, 2003 12:56 am

In the end Delta will lose a lot of money on this route. Someone stated here before all Airtran and Jetblue have to do his fill 300 or so seats a day. Delta has to fill over a thousand seats. Yields now are in the toilet. Delta has made harder for them to make money but they will eventually make money. I think the highest fare on this route(correct me if im wrong) was over $2000.00. Now I think its a little over $400.00.

Is it predatory? Maybe. But Delta has to do something. They can't just hang around, they have to protect market share.

It will be harder to make a profit for both Airtran and Jetblue but it will be even harder for Delta to make money. Airtrans average fare was $78.00 last quarter. They made money. Delta that's not even close.
 
DCA-ROCguy
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Sat Apr 26, 2003 1:04 am

I really hope you're right, Travis and Rumorboy...it'd be great to see Delta's attempt at predation just turn into lots of money down the drain. Then they can go back to their regular amount of service and still have to charge only $400 on a bunch of it if they want to hold even that share.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
ont 737
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Sat Apr 26, 2003 1:54 am

The success of the one daily LGB-SLC flight is evidence that LGB-ATL will be alright for B6. From SLC DL flies 8 daily to LAX, 5 five daily to SNA, and 3 daily to ONT; plus WN has another 4 daily to LAX. With minimum frequency, minimum connection options, and flying into a DL hub; that *one* flight is still flying at near capacity. I know there are a lot more flights from ATL to SoCal but then again ATL is much bigger than SLC. I'm not worried about the FF mileage bonus. JetBlue didn't even have a FF program for a while and they still did fine against Delta. If you book online and fly ATL-LGB round trip that's already 24 of the 100 points needed for a free flight. That sounds pretty good to me.
 
UN_B732
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Sat Apr 26, 2003 2:17 am

Delta wants to kill competition. ATL-LAX on Delta, Song. Mullin is bloodthirsty, did I say blood, I meant to say A-1.
-UN_B732
What now?
 
UN_B732
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Sat Apr 26, 2003 2:18 am

and Last-Minute fc is $359 one-way. Last-Minute Coach is also discounted
What now?
 
rumorboy
Posts: 295
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Sat Apr 26, 2003 2:20 am

last minute walk up FC is 359.00 one way.


wow that gotta be hurting Delta!!
 
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airzim
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Sat Apr 26, 2003 2:38 am

Would you call Ryanair's tactic of selling fares from DUB to EDI for 1 pound predatory? I would.

It happens both ways. In fact one could argue that Ryanair is the dominate airline from Ireland to the UK, and Aer Lingus is still in the game. Is it different that the LCC is now acting the same way?
 
BeltwayBandit
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Sat Apr 26, 2003 3:24 am

Delta's behavior is a classic example of a major using its balance sheet (or what's left of it) to pound a LCC into submission. They flood the city pair with frequencies and match price. They don't care if they can't fill the seats; they are simply trying to pull people out of the LCC's seats by diluting the market. When the LCC relents and leaves the market, the incumbent will reduce their frequencies and jack the fares back up.

Free market types say that this is fine. Customers yield the benefit for a while, and the incumbent is free to make economic choices as it sees fit. It is a rational act by the incumbent to use what advantages it has to beat the LCC competition. Others might say that the consumer enjoys a brief holiday, but is quickly returned to a noncompetitive situation paying monopoly prices.

Interesting debate.
 
Greg
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Sat Apr 26, 2003 3:35 am

But by legal definition it can be argued that the action is not predatory in either spirit or intent. Both sides can make a case...but Delta would very likely prevail.

However, going any further into areas such as capacity dumping or shifting slots in controlled airports onto this route would likely be deamed as spiriting a non-competitive atmosphere.
 
DCA-ROCguy
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Sat Apr 26, 2003 4:32 am

Free market types say that this is fine. Customers yield the benefit for a while, and the incumbent is free to make economic choices as it sees fit. It is a rational act by the incumbent to use what advantages it has to beat the LCC competition. Others might say that the consumer enjoys a brief holiday, but is quickly returned to a noncompetitive situation paying monopoly prices.

Actually, predatory behavior is against free markets. Stiff antitrust laws are not "regulation of business." They simply protect a level playing field on which all businesses may compete freely, and new entrants have a fair chance to succeed or fail based upon their merits and management.

Predatory practices are anti-capitalistic. Capitalism is about the creation of wealth for all, not the bleeding of the many to profit the few. That latter is called financialism, and it's the enemy of free-market capitalism. Financialism also creates an angry political climate that can lead to anti-free market regulation.

Jim

Need a new airline paint scheme? Better call Saul! (Bass that is)
 
delta-flyer
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RE: Delta Turns Predatory On ATL-LAX; Triple Miles

Sat Apr 26, 2003 4:45 am

Does anyone know the legal meaning of "predatory" -- in laymaen's terms?

BTW... thanks for letting us know about the triple miles...I usually go to SNA and LAX through DFW, but for triple miles.....

Pete
"In God we trust, everyone else bring data"

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