Well, had they not been "allowed," consolidation would have happened by other means. One way or another, the industry was going to rationalize and consolidate - by means either "orderly" (mergers) or disorderly (liquidations). In the decade following 9/11, airline industry investors collectively refused to continue subsidizing economically unsustainable competition. That's just the inescapable reality.
Which legacy was teetering on Chapter 7 after the bankruptcies? Answer: none. We know what an airline on the brink of chapter 7 looks like---TWA in March 2001. None of the six legacies were at that point after the 00's bankruptcies. So obviously someone was investing. And I'm not arguing for "subsidizing economically unsustainable competition," which you apparently haven't been paying attention to, you just read it in since I'm not agreeing with your narrative.
That is baseless and false. Other "winners" of consolidation include employees who finally have some career stability and are earning better compensation, and passengers who value stable, profitable well capitalized airlines that aren't teetering on the brink of bankruptcy and are able to invest in new and better airplanes, facilities and technology.
I'll grant, the employees who have jobs are probably happier. After the bankruptcies, of course, the legacies were no longer "teetering" on its brink. A more competitive but not unsustainably competitive industry presumably could make investments in facilities (though perhaps not Taj Mahal stuff like MWAA's drunken-binge spending at IAD).
First off, for about the thousandth time, not everyone defines "common good" purely based upon "lower airfares." I'm quite sure there are lots of ordinary, middle class, taxpaying American citizens who are either employees of, or investors (directly or indirectly) in, airlines - and I'm quite sure those individuals would define the "common good" of the airline industry as a stable, profitable business generating risk-appropriate returns. Second, setting aside the laughably subjective definition of "reasonable," I'd say that "reasonable service at reasonable prices to the broadest number of destinations" is pretty much exactly what the U.S. airline industry provides today. Airlines provide countless choices - catering to various different sets of customers' definitions of "reasonable" - to virtually every population center of consequence in the country, not to mention connectivity to every destination of consequence on earth.
Lower airfares are an *essential element* of the common good aspect of air travel. But I've never said they're the only one, you're just reading that in. And when talking about something that didn't happen, one has to make educated speculation, but I disagree that mine is "laughably subjective."
Again, baseless. Virtually every single city of consequence in the U.S. has service from not one but multiple low fare airlines, along with multiple network carriers, and my personally guess is that city pairs representing >95% of the traffic in the U.S. have multiple competitors.
Sorry, but reasonably-priced air travel isn't just for "cities of consequence." Smaller markets need suitable connections, too, at reasonable cost. Allegiant has been a big help, of course, linking smaller markets with sunspots with its innovative model. I'm not sure what the answers are for the rest of the system, but the current system needs improvement, particularly at markets of MSA's below 500,000 or so.
Again, customers in small markets enjoyed a level of capacity during regulation that was never economically efficient. It was an inefficient allocation of resources to satisfy political - not economic - objectives. The market doesn't work that way. It allocates resources where economics dictate. And ... "employees lose" from consolidation? Ha. That's hilarious. Ask virtually any employee who has worked at virtually any airline in the U.S. for over a decade if they're happier with their compensation today vs a decade ago. I'm fairly confident of where the vast majority of opinion will fall. And consolidation isn't the only reason for the better pay, better union contracts and greater certainty - but it's a huge part of it.
Efficiency isn't the only good involved with a social good like air travel, sorry. The market should control the majority of how the market functions, because, as history indicates, it will produce reasonable service distribution for a large percentage of the population in bigger markets. But it fails when you get to smaller markets. Again, I don't know exactly *how* to improve service at smaller communities. One approach for now is for local business communities to cooperatively set up their own funding pools for dedicated flights and develop relationships with carriers. That can be a big help to a local community, like what Grand Rapids did.
Again, employees who still have jobs indeed probably like the current situation better than say 2005. But, then again, I'm not calling for a return to 2005; only you seem to think I'm doing that. I'm calling for a third way somewhere in between. History has shown that neither CAB-style regulation (contra the OP's article) nor the laissez-faire approach to consolidation taken by the Reagan, Bush II, and Obama administrations, is good economic policy that serves the common good. Somewhere in the middle--solid antitrust policy, and some sort of legal requirement for certain degrees of air service to smaller communities, probably. I'd have to think about it in more detail.
No. It still isn't.
Laissez-faire is bad public policy, just as is government heavy-handedness. Aristotle is right after all these millennia. Virtue is a mean.
That is all entirely arbitrary and subjective. I, also entirely arbitrarily and subjectively, view the airline industry structure we have now as near-perfect. We all get the same number of votes every other November. So who is right?
I'm talking about something that never actually happened, so the best I can do is make educated speculation. I disagree that my view is "entirely arbitrary and subjective," but it necessarily involves speculation. But, then again, I don't take the status quo or things that have happened as defining the entire range of what's possible.
That is a highly creative, but highly false, rewriting of history. The industry was going to consolidate one way or another. Nothing could stop it. The only question was whether it would consolidate via merger or liquidation. The bank was closed - capital dried up and the providers of that capital simply refused to keep handing money to consumers.[
Again, it helps if you respond to what I wrote, rather than trying to limit discussion to your very philosophically debatable narrative. I'm proposing something that didn't actually happen, but could have. And you keep saying "the bank was closed," but the historical fact is that after the 00's Chapter 11 bankruptcies no legacy was teetering on the brink of Chapter 7. Again, we know what that looks like, TWA in March 2001, and that wasn't the case for any legacy by 2010. But, assuming that some benefit of economy of scale could be achieved by one or two smaller legacies selling out, perhaps some sort of transaction where one or two smaller legacies were broken up by a DOJ-approved plan to ensure at least four or five surviving legacies, might have worked. Again, that's speculative.
And, again, I've nowhere called for "banks to hand money to consumers," that's in your own head, but certainly not in anything I actually wrote. The situation in 2005 did need to change, no one disagrees about that.
It should be obvious that choice will be less and fares will be higher in small cities. That's economic reality - it's a feature, not a defect, of the market. Volume drives economies of scale. Economies of scale driver lower costs. Lower costs drive lower fares. Thus why big cities attract lots of flights from lots of airlines, and small cities attract fewer flights from fewer airlines. This is common sense.
Maybe some choices will be less and fares somewhat higher, but they're way out of whack as it is. The current situation is only "common sense" in a narrowly laissez-faire mindset, which is not good public policy. The postmodern economy demands air connection, and it's not good enough for many smaller communities.
Well we tried excess competition for thirty years. The result was every single major U.S. airline except two filing for bankruptcy at least once, hundreds of thousands of jobs eliminated and pensions frozen or terminated, billions of dollars of deferred or cancelled capital investment, billions of dollars of investors' money burned, and ... dirt cheap fares for consumers. Notice how one of those isn't like the others?
The airline industry going forward from 1978 had unsustainably high costs and it needed market discipline. That happened in the 1980's, and again in the 00's, and both times it was badly needed. Only after the 00's bankruptcies were legacy costs getting to somewhere in keeping with good public policy. None of this was "excess competition." It was exactly what needed to happen. But it neither could nor should have gone on forever, and nowhere have I argued that it should have. A mixture of free market and proper antitrust and minimal regulation would have produced a better exit from the last decade than consolidation: a sustainable industry with proper public policy to ensure reasonable service distribution in medium- and smaller-markets, neither overcapacity nor undercapacity. We can only speculate what it would have looked like, I'm just trying to argue for a general portrait.