brilondon
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Too Many Airlines In The US

Thu Jul 12, 2012 3:13 pm

Given the current talk about AA merging with (insert airline of the day here), I was wondering if the current and foreseeable future market is too small for the number of airlines all vying for passengers and what the right number of airlines would be if you could have the right number?
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DLPMMM
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 3:22 pm

There is room for 3 legacies, 3 large LCCs, a couple of specialized regionals like HA and AS, then some commuters.

There are always too many competitors in the USA market, because there are some irrational investors who think that owning an airline is "cool"
 
yegbey01
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 3:35 pm

Compare the US market with that of Europe...and you will get your answer.

IMO, the US could easily have more airlines.
 
lhcvg
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 3:43 pm

Quoting DLPMMM (Reply 1):
There are always too many competitors in the USA market, because there are some irrational investors who think that owning an airline is "cool"

Indeed! How does that old saw go, "the best way to become a millionaire in the airline business is to start out a billionaire"?
 
DLPMMM
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 3:44 pm

Quoting yegbey01 (Reply 2):
Compare the US market with that of Europe...and you will get your answer.

IMO, the US could easily have more airlines.

You didn't notice the consolidation that has been going on in Europe? How many of their carriers are now losing lots of money and/or going bankrupt?

Europe is just a few years behind the USA in the rationalization of the commercial airline market.
 
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Mortyman
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 3:47 pm

Quoting yegbey01 (Reply 2):
Compare the US market with that of Europe

Hm ...

Europe has a much bigger population than the USA ... I would have regarded Europe to be a much bigger market ?
 
yegbey01
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 3:50 pm

Not really....There are no high speed trains in the US that compete with airlines on a large scale
 
mikey72
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 3:51 pm

Quoting LHCVG (Reply 3):
Indeed! How does that old saw go, "the best way to become a millionaire in the airline business is to start out a billionaire"?

Your very own Bob Crandall once said....

"A lot of people came into the airline business. Most of them promptly exited, minus their money"
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
MountainFlyer
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 3:52 pm

Quoting DLPMMM (Reply 1):
There is room for 3 legacies, 3 large LCCs, a couple of specialized regionals like HA and AS, then some commuters.

So, are you saying basically what there is now (assuming US and AA merge)?

I don't know that you can put a number and say there should be XX number of airlines for XX size market. There are so many factors involved such as airline efficiencies and business models. If you would have asked the same question twenty years ago, who would have guessed that TW, NW, CO, HP and others would be gone now, and that we'd have B6, VX in the mix?
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slider
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 3:54 pm

I think the root question is specious. The issue isn't if there are too many or too few US carriers. The issue is whether they can all profitably and reasonably co-exist, no matter the number.

History hasn't really given us an answer to that one yet, but it would seem as if domestically, they've found religion in capacity restraint and pricing discipline (as well as cost discipline by and large).
 
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par13del
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 3:58 pm

I think the issue in the USA is why consolidation is taking place, namely to reduce competition allowing increase yields and revenue, providing service to the customer is way down the list.
Since the market is open and the merged carriers have not been able to get laws passed to limit competition, a continuous cycle will exist. As the massive carriers make their money and do not provide service to a number of areas, business options are presented and savy and dumb investors will jump in to the market creating new airlines.
The savy ones will create airlines like NK, B6, AS etc. and eventually in the next cycle after their growth period will become candidates for mergers, the dumb ones will get crushed by the majors and their nefarious activities.

When customers around the country are complaining about monopoly service and high prices its hard to pick a number and say 3 legacies, 3 LCC's etc. My opinion is the USA from a pax perspective needs more commuter airlines who operate like WN or NK, no alliance, just charge pax for travel from A to B, in some cases combining all services into one creates more system problems than it solves, let pax find their own way to hubs, share the business versus trying to control everything from curb to curb.
Just a thought.
 
Italianflyer
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 4:01 pm

I love this kind of topic..because I am a contrarian to the B-school, hedge-fund driven mantra that consolidation will solve everything. The mathematic and statistical models say that consolidating the US marketplace into 2 or 3 network mega carriers with 1 or 2 LCCs will give the industry pricing traction to sustain profits and a return on capital. In a vaccuume I'm sure it does...but the airline industry is not the utility or railroad industries. The aforementioned are not subject to external shocks that impact airlines: geopolitics, plague/disease and economic flux in far away places.

When we put our national transportation system in a few baskets, we get into a 'too big to fail' scenario.....and that is counter intuitive to the free market mechanism. (see the financial industry in 2008 as exhibit A) Second, domestic capacity is already tight. If AA (or DL,US, UA) were to fail and close today, there is no way the surviving carriers could absorb the demand. Imagine face to face business meetings being put off because there are no seats available from SFO to ORD until next Thursday. Extrapolate that scenario a few thousand times and you are looking at serious national economic consequences.

Finally....global network carriers cannot be all things to all people. It has been done several times and failed (PS>UA>Ted, DL>DLExpress>Song,CO>COLite, everybody>regional partners). I personally think that there is no magic number, per se, that will lead to industry stability. I believe the key is capacity discipline, finding your market niche, sticking to it and serving it well.

Just my .2....Im sure some will tear it apart...just keep it respectful lol
 
 
SPREE34
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 4:02 pm

Not too many airlines. Too many seats being flown below cost.
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N202PA
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 4:08 pm

IMO, there are way too FEW airlines. Not enough choice for consumers. Too much control of the industry locked up in the hands of a few companies. As a consumer, who are you going to threaten to take your business to when an airline screws you over if there's only 1 or 2 alternatives that treat you the same way? Our government has failed us in allowing these mergers to continue to occur and letting airlines become too big - all the while allowing the environment for competition to dry up.

It's not surprising, though - it's a reflection of what our government has allowed over the past 10 years with corporations in general. Our landscape is dominated by a few mega-players in most industries who have little incentive to serve the consumer well now that they've eaten up all the competition. While the corporations profit and the politicians get fat off corporate dollars, the American people are the only ones that lose out - in the airline industry or otherwise.
 
mogandoCI
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 4:10 pm

Quoting yegbey01 (Reply 2):
Compare the US market with that of Europe...and you will get your answer.

IMO, the US could easily have more airlines.

Difference is that in Europe, all the large carriers are 100% fortress hubs. BA/IB vs. AF/KL vs. LH/LX don't overlap a single core hub. Intra-Euro fares are extreme - the Big 3 gouge you on the upfront fare, while Ryanair trap you on fees.

In the US, we have all airlines fighting to death over limited space. LAX has 3 airline hubs (UA, AA, WN), 1 focus city by DL, and another focus city/hub down the road at LGB. Chicagoland has 3 (if you exclude MKE). NYC has 4 airlines hubbing. Even freaking DEN has 3 airline hubs. The consumer wins, but all the airlines price war into Chapter 11.
 
sw733
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 4:11 pm

Quoting yegbey01 (Reply 2):
Compare the US market with that of Europe...and you will get your answer.

IMO, the US could easily have more airlines.

Yep, if there's one thing to look at Europe for, it's how to succeed financially in 2012  

I kid, I kid...but only slightly.
 
lhcvg
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 4:13 pm

Quoting mikey72 (Reply 7):
Your very own Bob Crandall once said....

"A lot of people came into the airline business. Most of them promptly exited, minus their money"

I forgot about that one, but it is very true. It certainly corroborates the following too:

Quoting SPREE34 (Reply 12):
Not too many airlines. Too many seats being flown below cost.

It's not as if the U.S. industry suffers a want of creative ideas and solutions, it's just that so many faily disastrously. It seems like every cute new idea ends up failing that basic test of somehow trying to rationalize (on the books) being able to fly too many seats below cost.
 
Italianflyer
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 4:20 pm

Europe also has an efficient and comprehensive rail system and a much smaller land mass with shorter distance between population and economic centers. Despite what the high speed rail fanboys say..connecting ATL to NYC/ DC or CHI to NY or DAL via rail will never happen. Rail makes sense in a handful of places in the US.
 
klwright69
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 4:21 pm

Quoting MountainFlyer (Reply 8):
If you would have asked the same question twenty years ago, who would have guessed that TW, NW, CO, HP and others would be gone now,

Actually 20 years ago most of the above carriers were in big trouble: CO and TW were operating under bankruptcy protection, and maybe HP also. A consolidation of the industry was coming, and everybody knew it. In 1992, some of my friends at CO were predicting they were going to merge into NW, since NW had a stake in CO. PA and EA had recently vanished.

Quoting MountainFlyer (Reply 8):
and that we'd have B6, VX in the mix?

True, but since deregulation carriers have come and gone. No one ever predicted no new airlines would be created.

I vividly recall the industry 20 years ago. Then it was considered novel and strange to be an airline in bankruptcy, and the general thinking was no airlines every successfully survived a chapter 11 filing. Therefore I think the biggest surprise would have been that CO would still be around as an independent carrier for 20 more years.

It is hard to say the ideal number of airlines. Airlines that are loosing money hand over fist can hang on for a long time.
 
TecumsehSherman
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 4:35 pm

Quoting brilondon (Thread starter):
Given the current talk about AA merging with (insert airline of the day here), I was wondering if the current and foreseeable future market is too small for the number of airlines all vying for passengers and what the right number of airlines would be if you could have the right number?

Depends how you look at it. It very well be there were too many Legacy carriers, which is why consolidation has been moving fast and furious for the past five years, with DL/NW, UA/CO and, AA and most likely US.

But there is obviously room for regional, mostly LCC carriers. Aircraft are going out very full this summer on everyone, so there certainly aren't too many seats to handle the demand.

And even as you have consolidation, there's no doubt that, in the future, you well see new start up carriers. Some may last a very short time, and some may make it. But in the U.S., I don't think there's too many carriers.
 
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 4:42 pm

Quoting ItalianFlyer (Reply 11):
Second, domestic capacity is already tight. If AA (or DL,US, UA) were to fail and close today, there is no way the surviving carriers could absorb the demand. Imagine face to face business meetings being put off because there are no seats available from SFO to ORD until next Thursday.

But that's not what would happen.

If a major shut down today, the surviving carriers would immediately hike their prices up to restore supply/demand balance. You'd still be able to go SFO-ORD when you wanted to...it would just cost you more. As it should.

Tom.
 
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Aesma
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 4:50 pm

Quoting yegbey01 (Reply 6):
Not really....There are no high speed trains in the US that compete with airlines on a large scale

They compete on some routes, complement each other on others. But I'd say the difference between the US and EU is that in EU you'll tend to use airlines available at the nearest hub of your country, not changing planes at a hub in another part of the EU, when in the US changing planes at a hub is very common. So, the US airlines compete on the same market whereas the EU airlines are more side by side.
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planemaker
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 5:24 pm

Fewer airlines will mean fewer delays... and fewer RJs.
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DocLightning
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 5:52 pm

Quoting yegbey01 (Reply 2):

Compare the US market with that of Europe...and you will get your answer.

IMO, the US could easily have more airlines.

Yup. The issue isn't how many airlines, but how many ASM's and how many aircraft.

Quoting Aesma (Reply 21):
They compete on some routes, complement each other on others.

The only US route system that has any "HSR" competition (and I use the term "HSR" very loosely) is the North-East Corridor. Boston-NYC-DC. Even then, the average line speed of Amtrak's Acela is only about 80MPH. The Acela takes 3.5 hours from Penn Station to Boston, while the normal train takes just under 4. Really, the only advantage to Acela over regular train is the nicer interior. That said, I always used the train on those routes even though door-to-door time was a bit longer than a flight because the overall experience was just so much less stressful.

Quoting Aesma (Reply 21):
But I'd say the difference between the US and EU is that in EU you'll tend to use airlines available at the nearest hub of your country, not changing planes at a hub in another part of the EU, when in the US changing planes at a hub is very common.

To some degree, yes. But probably not as much as you think. Most major US cities have a hub. If you live near that hub, you will tend to use the hub airline(s) available there. Of course, there might not be a non-stop to where you are going (say you want to fly DTW-RNO), in which case you will choose any airline that can get you there in one stop. It is far less common for someone living in Detroit to insist on flying UA or AA and connecting through ORD.

The difference, I think, is with national identity. If you live in Grand Rapids, MI, and want to get to SFO, you won't necessarily fly DL through DTW. You could go US or AA through Chicago, or you could fly DL through MSP. If you live in Lyon, France and want to get to GLA (assume ML is off-season), you could choose AF, KL, BA, or LH among the majors. But most Frenchmen would probably choose AF. That said, on an individual level, and leaving FF programs aside, my guess is that a Frenchman is just as likely as an American to go with the cheapest and most convenient itinerary.
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Mortyman
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 6:57 pm

Quoting ItalianFlyer (Reply 17):
much smaller land mass

Europe: Area 10,180,000 km2 (3,930,000 sq mi) - Pop. density 72.5/km2

USA: Area - Total 9,826,675 km2 ( 3,794,101 sq mi ) - - Density 33.7/km2 ( 87.4/sq mi )
 
comair25
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 7:28 pm

Quoting planemaker (Reply 22):
and fewer RJs

I highly doubt it...
 
planemaker
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 7:48 pm

Quoting comair25 (Reply 25):
I highly doubt it...

With fewer airlines you have fewer aircraft carrying the same number of pax (+ growth) and that means larger aircraft.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
MountainFlyer
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 7:59 pm

Quoting planemaker (Reply 26):

With fewer airlines you have fewer aircraft carrying the same number of pax (+ growth) and that means larger aircraft.

That doesn't correlate. Fewer airlines does not necessarily = fewer aircraft.

Also, the number of passengers is not necessarily static, either. As airlines consolidate and create better a better pricing environment, fares will rise which will mean fewer passengers than there otherwise would be at a lower price level. That's the whole idea of consolidation is right-sizing the capacity to be able to price according to the cost.

Fewer RJ's will be as a result of fuel prices, not market consolidation.
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par13del
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 9:29 pm

Quoting Mortyman (Reply 24):
Density 33.7/km2 ( 87.4/sq mi )

The key is the density not the landmass, the greater population spread in the USA makes mass transit difficult, not impossible, but difficult.
 
planemaker
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 9:43 pm

Quoting MountainFlyer (Reply 27):
That doesn't correlate. Fewer airlines does not necessarily = fewer aircraft.


It does correlate... you just have to look at the upgauge trend across the board. Furthermore, if airlines merge they are obviously going to "merge" their flights.
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mayor
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 10:18 pm

Quoting Mortyman (Reply 24):

Europe: Area 10,180,000 km2 (3,930,000 sq mi) - Pop. density 72.5/km2

USA: Area - Total 9,826,675 km2 ( 3,794,101 sq mi ) - - Density 33.7/km2 ( 87.4/sq mi )

Is this just the lower 48 or does it include Alaska?
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Mortyman
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 10:22 pm

Quoting mayor (Reply 30):
Is this just the lower 48 or does it include Alaska?

Apparently it includes Alaska:

http://en.wikipedia.org/wiki/USA


Europe:

http://en.wikipedia.org/wiki/Europe
 
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DeltaMD90
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RE: Too Many Airlines In The US

Thu Jul 12, 2012 10:30 pm

I don't think there really are/were too many airlines... I think there was too much capacity. You can have the 3 mega carriers and 3 LCCs be healthy and profitable just like you could have had 5 or 6 legacies be profitable.

I think the biggest problem was propping up the dying airlines back in the early 2000s. There are too much capacity (not necessarily too many airlines) and if one legacy went under, maybe that would've reduced the capacity to a reasonable level. There were other problems, yes.

Saying that there are too many airlines or too few airlines ignores the realities of capacity. If you got all the current airlines profitable and split them all in half, I don't think there would be dramatic changes
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jporterfi
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 12:58 am

IMO, there will always be a market for different types of airlines in the U.S.: legacies, LCCs, and regionals. We already have consolidation among the legacies, and I don't see a need for consolidation among regionals or LCCs. I think the real problem is high ticket prices (especially in recent months), which result from high fuel prices and other expenses. If all the airlines in the U.S. can coexist, then let them coexist and let them fail and/or merge when necessary to keep the system healthy. One final note: if the Essential Air Service was downsized, I think that airlines would be better off, because even though the government is giving them money to operate those routes, they still are their least profitable routes, and often suffer from poor load factors. I think it's better to cut capacity on those routes and use the aircraft/capacity to supplement existing routes that have high load factors.
 
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crj900lr
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 1:07 am

Quoting planemaker (Reply 22):
Fewer airlines will mean fewer delays... and fewer RJs.

Airlines need to get back to flying mainline aircraft on alot of these routes that the regionals are flying. If you are looking to eliminate airlines I would start with the regionals. Their product, for most of them, is well below that of a mainline carrier eventhough they carry the mainline name on their aircraft.
 
USPIT10L
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 1:23 am

Quoting klwright69 (Reply 18):
In 1992, some of my friends at CO were predicting they were going to merge into NW, since NW had a stake in CO.

NWA did not buy the golden share in CO until 1998. In 1992, everybody was too worried about matching Crandall's Value Plan at AA to worry about consolidation. Everybody lost horrendous amounts of money in '92.
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commavia
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 2:00 am

Quoting brilondon (Thread starter):
I was wondering if the current and foreseeable future market is too small for the number of airlines all vying for passengers and what the right number of airlines would be if you could have the right number?

As others have said, I think the question really should be related to capacity in the aggregate, not necessarily airlines per se. And the answer depends largely on what the objective is - and, the truth is, in this country, even nearly 35 years after deregulation, we still do not have a single coherent national answer as to what we want from our airline industry. The capital markets - which airlines rely on to finance their operations as profit-seeking enterprises - want the airline industry to be profitable. Many politicians and public policy makers want lower fares that enable mass access. Those two goals inevitably come into conflict at some point.

But it all comes down to that question. If the ultimate goal is a stable, profitable industry that consistently earns its cost of capital and delivers value back to shareholders, than the answer is less capacity, less competition, (likely) fewer airlines, and higher fares. But if the ultimate goal is a highly competitive industry with low fares and more choices for consumers, than more capacity, more competition and (likely) more airlines are the answer.

Quoting ItalianFlyer (Reply 11):
The mathematic and statistical models say that consolidating the US marketplace into 2 or 3 network mega carriers with 1 or 2 LCCs will give the industry pricing traction to sustain profits and a return on capital. In a vaccuume I'm sure it does...but the airline industry is not the utility or railroad industries. The aforementioned are not subject to external shocks that impact airlines: geopolitics, plague/disease and economic flux in far away places.

If anything, airlines' higher exposure to risk and volatility would only tend to further validate the need for consolidation so as to diversify their revenue streams and more broadly allocate risk. That is precisely what many other high-risk, volatile industries - oil, pharmaceuticals, etc. - do.

Quoting ItalianFlyer (Reply 11):
When we put our national transportation system in a few baskets, we get into a 'too big to fail' scenario

That's highly debatable - but yes, it is true, unavoidable, and ultimately perfectly natural that in some industries you are going to end up with a few huge players that are going to generally dominate that market space. It happens in a myriad of industries besides just airlines - telecom, electronics, internet search, etc.

Quoting ItalianFlyer (Reply 11):
...and that is counter intuitive to the free market mechanism.

No it's not. "Too big to fail" is counter intuitive to the free market, but of course "too big to fail" is a political invention of bureaucrats and policy makers - not the market itself. Merely having an industry consolidate to a few large, oligopolistic competitors is not at all counter intuitive to the free market mechanism. Indeed - it is quite natural in many free markets, just like airlines, where capital requirements and fixed costs are so high and margins so relatively low.

The natural tendency of a free market is to allocate resources as efficiently as possible - and that is precisely what airlines have been trying to do, through consolidation, for years. The real action that has been "counter intuitive to the free market mechanism" was the government - for decades - arbitrarily and artificially stopping the airline industry from becoming more efficient through mergers.

Quoting DeltaMD90 (Reply 32):
I think the biggest problem was propping up the dying airlines back in the early 2000s. There are too much capacity (not necessarily too many airlines) and if one legacy went under, maybe that would've reduced the capacity to a reasonable level.

  

Quoting crj900lr (Reply 34):
Airlines need to get back to flying mainline aircraft on alot of these routes that the regionals are flying.

What airlines need to do is return value to shareholders - whatever that requires. Small jets are naturally going to go away in the next few years because of the rising costs of fuel and maintenance. But you're not going to simply see all that capacity replaced with mainline. Much of it will simply go away entirely, and many places that today rely solely on small jets for air service will simply see their air service disappear entirely or consolidate down to shorter list of carriers.

One of the key things that I think is often missed about the "rise of the RJ" in the last 20 years is that while it's true that much of that RJ capacity has replaced mainline flying at America's largest carriers, it's also true that realistically airlines were always going to have to cut capacity substantially in many current RJ markets anyway, because the truth is that there is so much more vibrant competition today than there ever was pre-deregulation, and thus it is just simply harder for any one airline to generate sufficient demand to fill larger jets in many markets.

Case in point: while AA may 35 years ago have been able to fill a DC10 from BUF to ORD, that would simply be impossible today because AA now faces direct competition from UA and WN in the BUF-CHI market, plus DL, US and B6 also heading west/south - there simply aren't enough people to go around anymore to fill up a plane that big for any one single airline.
 
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mayor
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 2:25 am

Quoting jporterfi (Reply 33):
have high load factors.

But we know that high load factors don't necessarily mean profitable, right?
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Asiaflyer
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 2:30 am

Quoting DeltaMD90 (Reply 32):
I think the biggest problem was propping up the dying airlines back in the early 2000s. There are too much capacity (not necessarily too many airlines) and if one legacy went under, maybe that would've reduced the capacity to a reasonable level.


Totally agree with that. Current legislation with Ch11 also keeps unprofitable airlines alive and prevents a fair competition.
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Lufthansa
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 2:37 am

Quoting ItalianFlyer (Reply 11):
If AA (or DL,US, UA) were to fail and close today, there is no way the surviving carriers could absorb the demand. Imagine face to face business meetings being put off because there are no seats available from SFO to ORD until next Thursday. Extrapolate that scenario a few thousand times and you are looking at serious national economic consequences.

This is the exact situation we faced when Ansett failed. It didn't last long. There were short term interruptions and a very massive expansion of QF and Virgin in a very short time. It created an ultimately healthier industry, and don't think that it gave them the excuse to jack up prices. Virgin has to watch it self carefully. It is now chasing the business market in a serious way, but if it hikes up fares too much the likes of jetstar and tiger will eat their market.

The problem is, in a true free market the US would have been left with just 2 or 3 big carriers years ago. They would have grown to dominate the market, and those who blew their capital would have been out of the business. Chap 11 allowed zombie carriers to stay in the market place in some form or another. This distorted the 'supply' side of the equation in supply and demand.
 
Carpethead
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 3:51 am

Forget cheap fares or number of airlines, I just wish the days back when ORD-CLE/SFO/LAX was operated on DC10 or similar aircraft and ORD-ALB on 727 or 73S.
All those routes are now on narrowbodies and RJs respectively.
Maybe that's why I live in Japan, where everybody thinks an A320 or 737 is a small aircraft.
 
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mayor
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 4:11 am

Quoting carpethead (Reply 40):
I just wish the days back when ORD-CLE/SFO/LAX was operated on DC10 or similar aircraft and ORD-ALB on 727 or 73S.

Not on $80+ a barrel oil, you don't.
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
Lufthansa
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 5:11 am

Quoting mayor (Reply 41):
Not on $80+ a barrel oil, you don't.

I beg to differ. I lighter weight widebody should give very good CASM on 4 or 5 hr routes. It's the competitive issue of frequency that is the problem. Taking an Hr to turn them around in between 4 or 5 hr flights won't really have much impact on total daily hrs in the air. It does however take too long for shorter routes.
 
boeingorbust
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 5:16 am

Quoting yegbey01 (Reply 2):
Compare the US market with that of Europe...and you will get your answer.

IMO, the US could easily have more airlines.

Population is much larger in Europe and the demographics differ greatly also.

Quoting DocLightning (Reply 23):

Yup. The issue isn't how many airlines, but how many ASM's and how many aircraft.

I believe this to a point but airlines are a business and act like a lung. They expand and intake as much as they can and then hit bad times and file for chapter 11 and exhale, downsizing fleet and routes. Then they'll begin expanding again. No matter what it will keep the same trend. Look at recently, DL and AA. AC in Canada had the issue but they get the joy of government bailouts and due to pension and union issues, they have decent loads but continue to lose money and there are only 2 carriers in Canada.

I do think there are too many airlines in the States, and the current mergers are a good thing all around. It's good to see some are turning profits. Loads are still really decent in the states too but I guess higher priced fuel and other costs continue to drain profitability to what it would have been 10 years ago.
 
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mayor
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 5:36 am

Quoting Lufthansa (Reply 42):
I beg to differ. I lighter weight widebody should give very good CASM on 4 or 5 hr routes. It's the competitive issue of frequency that is the problem. Taking an Hr to turn them around in between 4 or 5 hr flights won't really have much impact on total daily hrs in the air. It does however take too long for shorter routes.

ORD-CLE and ORD-ALB are certainly not 4-5 hr trips (examples from reply #40).
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
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AirlineCritic
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 6:15 am

Quoting slider (Reply 9):
The issue isn't if there are too many or too few US carriers. The issue is whether they can all profitably and reasonably co-exist, no matter the number.

  

Quoting slider (Reply 9):
History hasn't really given us an answer to that one yet

Hasn't it?

I would argue it has, very clearly.

How many legacies we have again that have not gone through a bankruptcy?
 
StarAC17
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 9:13 am

Quoting N202PA (Reply 13):
Our government has failed us in allowing these mergers to continue to occur and letting airlines become too big - all the while allowing the environment for competition to dry up.

You make a very important point and this just doesn't apply to airlines. It is whether the end result of free market capitalism will create a more competitive industry that is good for the consumer but margins are low or does it create oligopolies that become too big to fail where the opposite is true. When you get the giants there is little chance of new competitors being able to make a dent to the market.
Engineers Rule The World!!!!!
 
mikey72
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 9:27 am

I don't why the U.S.A can't just have 'one' big international carrier like everyone else ?

What makes you lot so special ? (I mean that in a nice way I am just trying to get my point across)

If you must just divide it into divisions. i.e Pan Am East, Pan Am West (the name I plucked from the air)

I think you should stop worrying so much about the benefits of competition within the country because you face 'more' than enough to keep you honest from outside it !!!

As for short-haul/domestic well you have the LCC's to keep you honest.

Time to start 'bigging up' yankie doodles otherwise you aint gonna get nowhere.

[Edited 2012-07-13 02:29:57]
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
Carpethead
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 9:32 am

Quoting mayor (Reply 41):
Not on $80+ a barrel oil, you don't.

Agreed, a DC10 would certainly not be competitive regardless of price of oil, but what I meant was current-day A330, 767 or 777-size aircraft on these runs.
Obviously, Japan and the US market are totally different, but major markets here are served largely by widebody aircraft with load factor not much higher than 60%. In fact, ANA's average load factor on domestic flights is less than 60%.

With fewer airlines, perhaps there is a chance that larger capacity aircraft be available. With the upcoming retirement age of 50-seat RJs later this decade, airlines will certainly have to either cut frequency and/or upsize to 70-seat RJs or props.
 
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par13del
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RE: Too Many Airlines In The US

Fri Jul 13, 2012 10:20 am

Quoting mikey72 (Reply 47):
I don't why the U.S.A can't just have 'one' big international carrier like everyone else ?

Simplistic answer, because all of us other lot who have such airlines were initially created by the government of the land, which meant that they made sure there was no competition and if there was, it was carefully crafted and allowed to exist in a niche capacity. Everything was done via political power to establish the single airline.
Yes a number of airlines the world over are now private, but they and their environment did not appear overnight, the legacy of government ownership remains.