DaufuskieGuy
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How to Revive Airline Competition

Wed Feb 28, 2018 11:36 pm

How to Revive Airline Competition - Let foreign-owned airlines fly in the United States.

http://www.slate.com/articles/health_an ... _able.html
 
ilovelamp
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How to Revive Airline Competition

Wed Feb 28, 2018 11:43 pm

That’s such a great idea that it hasn’t gotten close to becoming a reality in the 4.5 years since that article was written.

There’s a bill that has been introduced in the House and referred to the appropriate subcommittees by a Republican rep from VA that addresses this very thing. The bill proposes to amend the law preventing foreign ownership of US airlines. So far it has zero co-sponsors. It is likely to go nowhere.


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AWACSooner
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Re: How to Revive Airline Competition

Wed Feb 28, 2018 11:45 pm

Heh...riiight...and you think the countries those foreign airlines are based out of would reciprocate? Doubt it.

No thanks.
 
c933103
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 12:01 am

Is there currently not enough competition among airlines in the states?
Say NO to Hong Kong police's cooperation with criminal organizations like triad.
 
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LAX772LR
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 9:29 am

c933103 wrote:
Is there currently not enough competition among airlines in the states?

Well, if you listen to the AvGeeks on this site, who constantly conflate "number of airlines" with "competition," to the exclusion of *ALL* other factors... then you'd think there wasn't.

But that's a very simplistic, and ridiculously flawed, way of assessing it.

******************

That said, anyone who actually believes (in the event cabotage was permitted) that foreign airlines are going to come here and do ANYTHING beyond a few token flights on the California transcons-- is living in a fantasy world.

The notion that someone's going to challenge the likes of the four Legacies + WN/NK/F9/G4 on shorthaul, by offering higher service standards as their differentiating factor, and not lose their shirts in the process... needs to review the tenure of Virgin America (and before it: Legend, and several others) then snap back to reality.
I myself, suspect a more prosaic motive... ~Thranduil
 
bgm
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 10:17 am

AWACSooner wrote:
Heh...riiight...and you think the countries those foreign airlines are based out of would reciprocate? Doubt it.

No thanks.


God forbid people have access to competitively priced flights and humane treatment on their domestic flights.
████ ███ █ ███████ ██ █ █████ ██ ████ [redacted]
 
klm617
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 11:05 am

c933103 wrote:
Is there currently not enough competition among airlines in the states?



Not even close to enough. There was a time when there were 15 major airlines operating now there are 4. The najot markets will always have enough competetion but in secondary market the competition suffers.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
AWACSooner
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 1:46 pm

bgm wrote:
AWACSooner wrote:
Heh...riiight...and you think the countries those foreign airlines are based out of would reciprocate? Doubt it.

No thanks.


God forbid people have access to competitively priced flights and humane treatment on their domestic flights.

Because foreign airlines are the answer to everything? How about the traveling public actually decide to vote with their wallets against the 28" seat pitch, crappy service, and paying to load your own bags in their overhead bin? How about Uncle Sam actually having the stones to block some mergers in the interest of public competition instead of catering to the shareholders? How about the airlines actually using some common sense in giving a little back to the travelers as far as amenities and comforts instead of everything to the shareholders in terms of pure profits?
 
Bobloblaw
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 2:29 pm

Competition is fine right now
 
mia
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 2:34 pm

I look at flights to New Orleans from New York, and South Florida from New York. You used to be able to find $200-$250 on the routes for a weekend trip. Now, the only way to find those fares is to fly on a Wednesday or morning on Saturday and fly back Tuesday morning. We do not have enough real competition.
"Like all great travelers, I have seen more than I remember, and remember more than I have seen."
 
commavia
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 2:47 pm

In 2017, on an income statement/accrual accounting basis, AA generated a net margin of 4.5%, United generated a net margin of 5.6%, and Delta generated a net margin of 8.7%. I'm still waiting for a single cogent argument - just one! - as to why any one of those numbers is in any way excessive or unreasonable, let alone constitutes "everything" going to shareholders in the form of "pure profit." The irony is that the airlines in the U.S. that often produce the highest margins are the ones most effective at doing the things that many love to complain about so much, like fare unbundling and ancillary fees.

The disconnect from economic reality remains stunning. Airlines are for-profit businesses owned by their shareholders, and their entire reason for existence is to create economic value which - finally - they're doing, to the tune of, essentially, 5-9% per year. I've been saying for years, and to this day, I continue to be dumbfounded by the fact that people seem to have such a problem with airlines making money. It is as if, after the first three decades of deregulation, some people became so conditioned to airlines offering irrational fares, and destroying astounding amounts of capital in the process, that such individuals are literally offended by the prospect of airlines stopping such economically unsustainable insanity.
 
B757Forever
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 2:57 pm

commavia wrote:
In 2017, on an income statement/accrual accounting basis, AA generated a net margin of 4.5%, United generated a net margin of 5.6%, and Delta generated a net margin of 8.7%. I'm still waiting for a single cogent argument - just one! - as to why any one of those numbers is in any way excessive or unreasonable, let alone constitutes "everything" going to shareholders in the form of "pure profit." The irony is that the airlines in the U.S. that often produce the highest margins are the ones most effective at doing the things that many love to complain about so much, like fare unbundling and ancillary fees.

The disconnect from economic reality remains stunning. Airlines are for-profit businesses owned by their shareholders, and their entire reason for existence is to create economic value which - finally - they're doing, to the tune of, essentially, 5-9% per year. I've been saying for years, and to this day, I continue to be dumbfounded by the fact that people seem to have such a problem with airlines making money. It is as if, after the first three decades of deregulation, some people became so conditioned to airlines offering irrational fares, and destroying astounding amounts of capital in the process, that such individuals are literally offended by the prospect of airlines stopping such economically unsustainable insanity.



DING DING DING! We have a winner! Exactly my thoughts.
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XAM2175
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 5:47 pm

AWACSooner wrote:
How about the traveling public actually decide to vote with their wallets against the 28" seat pitch, crappy service, and paying to load your own bags in their overhead bin?


It's a magical thought but I have to wonder how in reality this would work. Its not like you can say "hi I'd like to pay a little bit more for 31" pitch and a slightly-less begrudging smile from the FA please, but not as much as I'd need to pay for an emergency exit row, two checked bags, and a three-course meal".

So voting with your wallet becomes a fairly ineffectual choice between
A) Vaguely-similar airlines all with vaguely-similar products so you end up choosing based on schedule and overall cost anyway
B) Other transportation choices (and all that wallet-voting for Amtrak is really doing them a world of good...)
C) Not travelling at all
and D) paying for Y+/W/J etc... which, guess what, reinforces the entire point of making Y as unpleasant as the market will bear!

Now sure, a sufficiently canny airline that had its cost structure nailed down to the last fraction of a cent and a really tight grip on market demands could probably manage to offer a slightly-improved Y product at a similar cost to the legacies - right up to the moment that somebody sufficiently-far up the chain realises that they can offer the exact same product as all the other airlines and bank the improved margins.

And after all that, as LAX772LR mentioned upthread, VX tried to walk that road and couldn't. At the back of the bus it really is price that sells the majority of tickets.

With a loosening of cabotage restrictions, foreign airlines could potentially buck this trend on a handful of routes (if the interest on QF LAX-JFK is any indication), but you'll never see them outside of the largest hubs.

With a loosening of foreign-ownership restrictions, it'll just be different people ultimately making and losing the money.
 
ilovelamp
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 6:49 pm

commavia wrote:
In 2017, on an income statement/accrual accounting basis, AA generated a net margin of 4.5%, United generated a net margin of 5.6%, and Delta generated a net margin of 8.7%. I'm still waiting for a single cogent argument - just one! - as to why any one of those numbers is in any way excessive or unreasonable, let alone constitutes "everything" going to shareholders in the form of "pure profit." The irony is that the airlines in the U.S. that often produce the highest margins are the ones most effective at doing the things that many love to complain about so much, like fare unbundling and ancillary fees.

The disconnect from economic reality remains stunning. Airlines are for-profit businesses owned by their shareholders, and their entire reason for existence is to create economic value which - finally - they're doing, to the tune of, essentially, 5-9% per year. I've been saying for years, and to this day, I continue to be dumbfounded by the fact that people seem to have such a problem with airlines making money. It is as if, after the first three decades of deregulation, some people became so conditioned to airlines offering irrational fares, and destroying astounding amounts of capital in the process, that such individuals are literally offended by the prospect of airlines stopping such economically unsustainable insanity.


Right on!

I can simply equate this to an entitlement attitude. “I must fly transcon with a 34” pitch for less than $100!” Anything less is “inhumane.” Give me a break.

The history of the airlines worldwide is generally not good. Heaven forbid they are in an incredibly successful time period due to the confluence of several positive factors, not the least of which is a strong domestic economy leading to higher demand of their services. When the economy tanks and that demand goes away, these high margins will provide a buffer for future losses and hopefully the major players will emerge relatively unscathed and we won’t see the bloodbaths (cuts in routes and services) that other downturns have provided.
 
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flyingclrs727
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 7:01 pm

I wish it were allowed to fly 6th freedom flights through Canada or Mexico with the US as both the origin and destination in cases where the great circle crosses the US border between the origin and destination. In my case, a plane flying from my home airport of CRP to LAX would cross the US-Mexican border 4 times. I would love it if there were the possibility of flying CRP-MTY-LAX. Also Why couldn't there be flights like BOS-YYZ-SFO?

Image
Last edited by flyingclrs727 on Thu Mar 01, 2018 7:07 pm, edited 1 time in total.
 
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flyingclrs727
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 7:05 pm

Allowing foreign airlines to fly 9th freedom flights in the US would not do anything to improve service to small and medium sized cities. They would just add more capacity to transcons and large city pairs that are already adequately served.
 
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STT757
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 7:19 pm

DaufuskieGuy wrote:
How to Revive Airline Competition - Let foreign-owned airlines fly in the United States.

http://www.slate.com/articles/health_an ... _able.html


So an airline like KLM gets to fly NY-Chicago, NY-LA, SF-SEA, NY-Orlando etc.. and AA, DL, UA get to fly Amsterdam to Rotterdam?

That's a terrible deal.
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XAM2175
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 8:42 pm

flyingclrs727 wrote:
I would love it if there were the possibility of flying CRP-MTY-LAX. Also Why couldn't there be flights like BOS-YYZ-SFO?


You can already do this, just not on the same ticket.
 
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flyingclrs727
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 8:56 pm

XAM2175 wrote:
flyingclrs727 wrote:
I would love it if there were the possibility of flying CRP-MTY-LAX. Also Why couldn't there be flights like BOS-YYZ-SFO?


You can already do this, just not on the same ticket.


But if anything screws up scheduling, it's the passenger's problem. I'm not going to connect between two flights on the same day without them being on the same ticket.
 
IPFreely
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 8:57 pm

AWACSooner wrote:
How about the traveling public actually decide to vote with their wallets against the 28" seat pitch, crappy service, and paying to load your own bags in their overhead bin?


People have voted with their wallets.

This board is chock full of posters who vote for tiny seats and poor service with their wallets then complain when they get what they pay for. It’s pretty entertaining, really.
 
AAvgeek744
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Re: How to Revive Airline Competition

Thu Mar 01, 2018 11:14 pm

LAX772LR wrote:
c933103 wrote:
Is there currently not enough competition among airlines in the states?

Well, if you listen to the AvGeeks on this site, who constantly conflate "number of airlines" with "competition," to the exclusion of *ALL* other factors... then you'd think there wasn't.

But that's a very simplistic, and ridiculously flawed, way of assessing it.

******************

That said, anyone who actually believes (in the event cabotage was permitted) that foreign airlines are going to come here and do ANYTHING beyond a few token flights on the California transcons-- is living in a fantasy world.

The notion that someone's going to challenge the likes of the four Legacies + WN/NK/F9/G4 on shorthaul, by offering higher service standards as their differentiating factor, and not lose their shirts in the process... needs to review the tenure of Virgin America (and before it: Legend, and several others) then snap back to reality.


It's time to consider WN as a legacy airline. Just because they are not as old have no trans-oceanic flights should not matter. They carry more domestic pax than what is commonly called the Big 3.
 
DDR
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 12:21 am

If people were willing to pay for more seat pitch, meals, etc., they would be doing it now. Having AF or LH flying DFW-ORD is not going to provide any of these things because people won't pay for it. I think a lot of people opposing foreign carriers flying domestic routes are afraid that these airlines would price them below cost in order to feed their international flights.
 
bzcat
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 12:27 am

This article is a bunch of nonsense. It conflates the kind of long haul service you see on foreign airlines with the reality of short haul flying overseas. Sure, SQ has nice economy class... but the typical flight on SQ is a 6+ hour international flight with high fares. If SQ were allowed to fly 1 to 3 hours domestic segments in the US, it will result in 1 of 2 ways...

1. SQ lose money hand over fist flying 4-class 777 from SFO to ORD with 50% load factor as a tag on flight.
2. SQ buys a bunch of 737 and put as many seats in it as possible, and charges you for a cold sandwich.

If we opened up cabotage to all comers, we'd get a bunch of Ryan Air, EZ Jet, Air Asia, Norwegian clones. Not fancy SQ serving you 3 course meals on a commuter flight from PHL to BOS.

So what will happen in the long run? A race to the bottom and some domestic airlines go out of business because they can't compete lower cost structure of foreign owned LCC. And then where do we end up? Probably an oligopoly of 4 or 5 airlines, except now half of them foreign owned. Meanwhile, airlines employee wages get further depressed and no one wants this as a career. So we create another crisis of "lack of competition".
 
mcdu
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 12:45 am

mia wrote:
I look at flights to New Orleans from New York, and South Florida from New York. You used to be able to find $200-$250 on the routes for a weekend trip. Now, the only way to find those fares is to fly on a Wednesday or morning on Saturday and fly back Tuesday morning. We do not have enough real competition.


Or just perhaps it now cost more to produce that seat and therefore it cost more to you.

Passenger bill of rights,government mandated safety equipment, government regulated rest rules, training etc all have a cost to the consumer.
 
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LAX772LR
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 1:27 am

AAvgeek744 wrote:
LAX772LR wrote:
The notion that someone's going to challenge the likes of the four Legacies + WN/NK/F9/G4 on shorthaul, by offering higher service standards as their differentiating factor, and not lose their shirts in the process... needs to review the tenure of Virgin America (and before it: Legend, and several others) then snap back to reality.

It's time to consider WN as a legacy airline. Just because they are not as old have no trans-oceanic flights should not matter. They carry more domestic pax than what is commonly called the Big 3.

No offense, but all this does is showcase that you don't know what the term signifies.
"Legacies" are the remaining airlines who had interstate operational authority prior to deregulation in 1978.

Of mainline carriers, only four remain: DL, AA, UA, and AS.
IINM, there are some regional operators remaining as well, though I'm at a loss for naming any off hand.

That is the "legacy" that is being referred to.
It has nothing to do with size nor transoceanic flights.

WN is not, nor will they ever be, a Legacy airline.
I myself, suspect a more prosaic motive... ~Thranduil
 
Planesmart
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 4:39 am

Bobloblaw wrote:
Competition is fine right now

You mean competition for the highest profits and lowest service standards.
 
ACDC8
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 5:31 am

bgm wrote:

God forbid people have access to competitively priced flights and humane treatment on their domestic flights.

I'm sorry, what exactly is "humane" treatment? And how do you think a foreign airline would be more "humane"?

As someone who flies around in the US on a frequent basis, I have absolutely zero complaints - competition,prices and service is great the way it is.
A Grumpy German Is A Sauerkraut
 
DCA-ROCguy
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 6:21 am

Allowing foreign carriers to operate domestically in the US, however appealing it sounds, would likely not strengthen competition or lower fares. The USA has a largely three-tier industry now. It's not clear how foreign carriers would penetrate any of them.

First, the legacy market is covered by our three megalegacies. How could foreign legacies, who are largely their alliance partners, and have similar cost structures, possibly make money by entering the US domestic market and competing with them? And where could said foreign legacies possibly set up US domestic hub operations? The airport real estate needed for legacy carriers is spoken for.

Second, the full-service LCC market is well covered. Southwest and JetBlue together offer thorough market coverage in that segment. Where would a foreign full-service LCC set up to compete? How could they make money?

Finally, history does not suggest that the thriving USA ULCC segment would support the entry of a large foreign ULCC. Perhaps Ryanair could bring the pocketbook to make the Skybus model work. But a major reason that Ryanair's patchwork-quilt model of secondary cities works well in Europe is the higher population density and better public transit. Maybe the Uber and Megabus age could make focus cities in USA medium cities and at peripheral airports around major markets work. I don't know. Frontier is doing some of this approach now, but on a very limited basis. It's not clear what a foreign carrier would bring that our ULCC's couldn't do if they saw the market.

More fare and capacity competition would be welcome. But with the industry structured as it is, there appears to be no opening for that to happen. Only a court-ordered breakup of the legacies, returning existing capacity at existing airports to five or six carriers, would physically allow significant increases in competition. And that cost could not be justified without CASM reductions. If the existing legacies are posting profits in the mid-to-high single digits, that is a very reasonable return on the *existing* cost structure.

Only significant CASM reduction would really offer a viable basis for significant development of fare and capacity competition. There would need to be a significant policy reason to justify such drastic government intervention. I'll have to do more research, but I do wonder if literally more rows of seats are moderating fares, and perhaps helping preserve a greater consumer share of the benefits of consolidation.

As far as "treatment" goes--the experience of the airport, onboard service, baggage, etc.--I for one have excellent experiences with the legacy mainline, legacy regional, and full-service LCC segments. (I haven't tried ULCC's.) Maybe it's my average height and build, but I'm quite comfortable with the seat pitch and width of literally every plane I fly on. And Recaro-type seats have suited me just fine. I'm sorry if others feel 'packed in,' but extra rows mean lower fares. At least in my experience, I have no complaints. TSA works just fine in my experiences, too.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
ual777
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 7:37 am

Planesmart wrote:
Bobloblaw wrote:
Competition is fine right now

You mean competition for the highest profits and lowest service standards.


And what standard is that? The hundreds of new aircraft ordered? Multiple new terminals, new, competitive hard products, almost universal IFE/WiFi? Or maybe it’s the better completion and on-time numbers.
It is always darkest before the sun comes up.
 
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NameOmitted
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 7:47 am

Airlines compete wit long haul buses on price.

Buses.
 
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XAM2175
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 7:54 am

flyingclrs727 wrote:
But if anything screws up scheduling, it's the passenger's problem. I'm not going to connect between two flights on the same day without them being on the same ticket.


Right, so it is possible, you just choose not to do it.
 
Yossarian22
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 8:12 am

I find the mergers troubling because now the U.S. has three or four airlines (depending on how you view Southwest) that are essientially too big to fail. Bad managment, bad luck, and/or bad unions can destroy an airline, airline history is littered with that.

But, I don’t really know what more peole want from airlines. I just checked Skyscanner, on Saturday March 3 AA has a one way flight from LAX to JFK for $257. Is it super comfortable? No. But which would you rather do, pay $500ish use round trip to fly across the country and be uncomfortable for a few hours, or pay $1500 and have plenty of leg room, a beer, and a low quality frozen meal? I just finished 7 weeks of flying across the world, starting and ending in China. This trip included three long haul flights, PVG-SEA, ORD-DUB, and PRG-PEK. The only expensive flight was PVG-SEA, $800 on Asiana, my other long haul flights were on Wow and the Russian (discount?) carrier, Ural. Overall, I flew on 12 flights, clocked in at less than $2000. 10 years ago, it would have been much more expensive. No $45 flight from CVG to ORD, no $250 flight from PRG to PEK, no $45 flight from AMS to Sofia.

My flight on Ural was not very comfortable, but whatever, it was 3 hours from PRG to SVX and 5 hours from SVX to PEK. I would rather pay $250 for that, than $500 for a marginally more comfortable economy product.

Think about what you get for how little you pay. You can fly across continents and oceans, for a small sum of money, something that use to cost thousdands of dollars you can do now for a couple hundred.

The biggest change I would want to see, is for airlines to be made to pay the same fees they charge when they change your flight. That is my biggest complaint. But price, and comfort, and cost of baggage, etc. I’ll take it for the ability to travel more.
 
bgm
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 8:28 am

The problem is you get poor value for money. Compared to Europe, for example you can fly Ryanair for 10 euros. In the US, you can fly southwest for $59 and that’s considered a good deal.

The legacies are even poorer value for money. They have high fares, nickel and dime you anyway, plus you get crap service from horrible staff (look at the daily incidents reported here).

What are you afraid of? Let the foreign carriers in and if your product is as solid as you claim it to be, it’ll stand up just fine.
████ ███ █ ███████ ██ █ █████ ██ ████ [redacted]
 
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EightyFour
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 8:44 am

XAM2175 wrote:
AWACSooner wrote:
How about the traveling public actually decide to vote with their wallets against the 28" seat pitch, crappy service, and paying to load your own bags in their overhead bin?


It's a magical thought but I have to wonder how in reality this would work. Its not like you can say "hi I'd like to pay a little bit more for 31" pitch and a slightly-less begrudging smile from the FA please, but not as much as I'd need to pay for an emergency exit row, two checked bags, and a three-course meal".

So voting with your wallet becomes a fairly ineffectual choice between
A) Vaguely-similar airlines all with vaguely-similar products so you end up choosing based on schedule and overall cost anyway
B) Other transportation choices (and all that wallet-voting for Amtrak is really doing them a world of good...)
C) Not travelling at all
and D) paying for Y+/W/J etc... which, guess what, reinforces the entire point of making Y as unpleasant as the market will bear!


This is exactly it. I want to pay more for a better seat, but I can't justify paying double price to get premium economy. I'd love to be able to for example pay 50-70 usd more to get a 9 abreast seat in a 777, but I'm not able to.
 
AAvgeek744
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 3:28 pm

LAX772LR wrote:
AAvgeek744 wrote:
LAX772LR wrote:
The notion that someone's going to challenge the likes of the four Legacies + WN/NK/F9/G4 on shorthaul, by offering higher service standards as their differentiating factor, and not lose their shirts in the process... needs to review the tenure of Virgin America (and before it: Legend, and several others) then snap back to reality.

It's time to consider WN as a legacy airline. Just because they are not as old have no trans-oceanic flights should not matter. They carry more domestic pax than what is commonly called the Big 3.

No offense, but all this does is showcase that you don't know what the term signifies.
"Legacies" are the remaining airlines who had interstate operational authority prior to deregulation in 1978.

Of mainline carriers, only four remain: DL, AA, UA, and AS.
IINM, there are some regional operators remaining as well, though I'm at a loss for naming any off hand.

That is the "legacy" that is being referred to.
It has nothing to do with size nor transoceanic flights.

WN is not, nor will they ever be, a Legacy airline.


No offense, but I absolutely know what the term legacy means, I come from an airline family whose father and brother both flew for airline long before deregulation.. My comment stands that it is an out-of-date way to refer to airlines. I consider WN as much of a "legacy carrier" as anyone. Means zero to the public, means zero to me. Cheers.
 
frmrCapCadet
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 3:44 pm

WN and JetBlue capture much of the 'just a little bit more comfortable' seats and staff who manage to see that you get from A to B in as stress free way as is possible. A-netters have asserted, and they may be right, that the legacies cannot rate the comfort/stress free factor in the various combinations of fares, seats, and times. As I often mention, when I go to a motel I want a 3 star experience. I don't need a 4 star, and I certainly am willing to pay enough to avoid a 2 star- except when it cannot be avoided.

Unless you have a lot of status it is simply a lottery as to what you will get when you look at prices on an airlines website or a service such as Orbitz. The very knowledgeable flyer can mange to do a lot better for not a lot more money, but most of us can't. So we fly WN whenever possible.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
caverunner17
Posts: 263
Joined: Tue Jun 14, 2016 9:50 pm

Re: How to Revive Airline Competition

Fri Mar 02, 2018 4:14 pm

bgm wrote:
The problem is you get poor value for money. Compared to Europe, for example you can fly Ryanair for 10 euros. In the US, you can fly southwest for $59 and that’s considered a good deal.

The legacies are even poorer value for money. They have high fares, nickel and dime you anyway, plus you get crap service from horrible staff (look at the daily incidents reported here).

What are you afraid of? Let the foreign carriers in and if your product is as solid as you claim it to be, it’ll stand up just fine.

I agree with you for the most part. While I'll occasionally see $40-60 fares on both ULCCs and Legacies in the US, it's increasingly rare. What's even worse is that many legacies are introducing the ULCC (economy basic) fares and continuing to charge higher prices.

And then you get continual inconsistent experiences on legacy airlines. Look at UA. Their Denver catering facility has been down for over 6 months so any first-class passenger only gets the BOB options. International flight crews can be lovely or act like they've been held at gunpoint to do their job. They introduce "upgrades" only to strip them away a few months later by penny pinchers (or take months to years to roll out the upgrades).
 
klm617
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 4:39 pm

AAvgeek744 wrote:
LAX772LR wrote:
AAvgeek744 wrote:
It's time to consider WN as a legacy airline. Just because they are not as old have no trans-oceanic flights should not matter. They carry more domestic pax than what is commonly called the Big 3.

No offense, but all this does is showcase that you don't know what the term signifies.
"Legacies" are the remaining airlines who had interstate operational authority prior to deregulation in 1978.

Of mainline carriers, only four remain: DL, AA, UA, and AS.
IINM, there are some regional operators remaining as well, though I'm at a loss for naming any off hand.

That is the "legacy" that is being referred to.
It has nothing to do with size nor transoceanic flights.

WN is not, nor will they ever be, a Legacy airline.


No offense, but I absolutely know what the term legacy means, I come from an airline family whose father and brother both flew for airline long before deregulation.. My comment stands that it is an out-of-date way to refer to airlines. I consider WN as much of a "legacy carrier" as anyone. Means zero to the public, means zero to me. Cheers.



I agree Southwest is a legacy carrier it operates along the same line as the US3 it is no longer the huge value it once was against the majors.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
klm617
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 4:41 pm

bgm wrote:
The problem is you get poor value for money. Compared to Europe, for example you can fly Ryanair for 10 euros. In the US, you can fly southwest for $59 and that’s considered a good deal.

The legacies are even poorer value for money. They have high fares, nickel and dime you anyway, plus you get crap service from horrible staff (look at the daily incidents reported here).

What are you afraid of? Let the foreign carriers in and if your product is as solid as you claim it to be, it’ll stand up just fine.


But Americans love to get poor value for the money as long as the for profit corporation is giving it's shareholders maximum return on their investment. I have heard here time and time again that a corporation's first responsibility is to it's share holders and that right there says it all.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
klm617
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 4:44 pm

flyingclrs727 wrote:
Allowing foreign airlines to fly 9th freedom flights in the US would not do anything to improve service to small and medium sized cities. They would just add more capacity to transcons and large city pairs that are already adequately served.


Exactly and these smaller markets are subsidizing all the cheap fares in the larger markets.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
klm617
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 4:49 pm

commavia wrote:
In 2017, on an income statement/accrual accounting basis, AA generated a net margin of 4.5%, United generated a net margin of 5.6%, and Delta generated a net margin of 8.7%. I'm still waiting for a single cogent argument - just one! - as to why any one of those numbers is in any way excessive or unreasonable, let alone constitutes "everything" going to shareholders in the form of "pure profit." The irony is that the airlines in the U.S. that often produce the highest margins are the ones most effective at doing the things that many love to complain about so much, like fare unbundling and ancillary fees.

The disconnect from economic reality remains stunning. Airlines are for-profit businesses owned by their shareholders, and their entire reason for existence is to create economic value which - finally - they're doing, to the tune of, essentially, 5-9% per year. I've been saying for years, and to this day, I continue to be dumbfounded by the fact that people seem to have such a problem with airlines making money. It is as if, after the first three decades of deregulation, some people became so conditioned to airlines offering irrational fares, and destroying astounding amounts of capital in the process, that such individuals are literally offended by the prospect of airlines stopping such economically unsustainable insanity.



First of all let's go a step further what are the margins that BA, LH, AF and KL operate at and the we can get a better picture of if the US3 is to greedy or not. So those margins include all the incidental fees or just based on the ticket price paid ? Southwest has been profitable year after year because of good management and for a long time was a great value for the price. I would say the reasons many airlines failed was because of very poor management not because their fares were to low if anything the reason people say this is because airlines didn't charge enough to make up for their bad managing or recourses. Now with most of the competition eliminated through mergers they can basically call the shots in the market always charging more to cover their blunders sort of like when airlines were regulated
Last edited by klm617 on Fri Mar 02, 2018 4:54 pm, edited 1 time in total.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
DFWAviator76
Posts: 72
Joined: Fri Oct 27, 2017 7:10 pm

Re: How to Revive Airline Competition

Fri Mar 02, 2018 4:55 pm

B757Forever wrote:
commavia wrote:
In 2017, on an income statement/accrual accounting basis, AA generated a net margin of 4.5%, United generated a net margin of 5.6%, and Delta generated a net margin of 8.7%. I'm still waiting for a single cogent argument - just one! - as to why any one of those numbers is in any way excessive or unreasonable, let alone constitutes "everything" going to shareholders in the form of "pure profit." The irony is that the airlines in the U.S. that often produce the highest margins are the ones most effective at doing the things that many love to complain about so much, like fare unbundling and ancillary fees.

The disconnect from economic reality remains stunning. Airlines are for-profit businesses owned by their shareholders, and their entire reason for existence is to create economic value which - finally - they're doing, to the tune of, essentially, 5-9% per year. I've been saying for years, and to this day, I continue to be dumbfounded by the fact that people seem to have such a problem with airlines making money. It is as if, after the first three decades of deregulation, some people became so conditioned to airlines offering irrational fares, and destroying astounding amounts of capital in the process, that such individuals are literally offended by the prospect of airlines stopping such economically unsustainable insanity.



DING DING DING! We have a winner! Exactly my thoughts.


Mine too. I don't understand why people think airlines should be treated differently from most other businesses.
 
DFWAviator76
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 4:57 pm

EightyFour wrote:
XAM2175 wrote:
AWACSooner wrote:
How about the traveling public actually decide to vote with their wallets against the 28" seat pitch, crappy service, and paying to load your own bags in their overhead bin?


It's a magical thought but I have to wonder how in reality this would work. Its not like you can say "hi I'd like to pay a little bit more for 31" pitch and a slightly-less begrudging smile from the FA please, but not as much as I'd need to pay for an emergency exit row, two checked bags, and a three-course meal".

So voting with your wallet becomes a fairly ineffectual choice between
A) Vaguely-similar airlines all with vaguely-similar products so you end up choosing based on schedule and overall cost anyway
B) Other transportation choices (and all that wallet-voting for Amtrak is really doing them a world of good...)
C) Not travelling at all
and D) paying for Y+/W/J etc... which, guess what, reinforces the entire point of making Y as unpleasant as the market will bear!


This is exactly it. I want to pay more for a better seat, but I can't justify paying double price to get premium economy. I'd love to be able to for example pay 50-70 usd more to get a 9 abreast seat in a 777, but I'm not able to.


Why can't you justify it? Obviously, other people do; otherwise, the airlines wouldn't be able to sell those Premium Economy seats.
 
bigjku
Posts: 1906
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 5:19 pm

klm617 wrote:
commavia wrote:
In 2017, on an income statement/accrual accounting basis, AA generated a net margin of 4.5%, United generated a net margin of 5.6%, and Delta generated a net margin of 8.7%. I'm still waiting for a single cogent argument - just one! - as to why any one of those numbers is in any way excessive or unreasonable, let alone constitutes "everything" going to shareholders in the form of "pure profit." The irony is that the airlines in the U.S. that often produce the highest margins are the ones most effective at doing the things that many love to complain about so much, like fare unbundling and ancillary fees.

The disconnect from economic reality remains stunning. Airlines are for-profit businesses owned by their shareholders, and their entire reason for existence is to create economic value which - finally - they're doing, to the tune of, essentially, 5-9% per year. I've been saying for years, and to this day, I continue to be dumbfounded by the fact that people seem to have such a problem with airlines making money. It is as if, after the first three decades of deregulation, some people became so conditioned to airlines offering irrational fares, and destroying astounding amounts of capital in the process, that such individuals are literally offended by the prospect of airlines stopping such economically unsustainable insanity.



First of all let's go a step further what are the margins that BA, LH, AF and KL operate at and the we can get a better picture of if the US3 is to greedy or not. So those margins include all the incidental fees or just based on the ticket price paid ? Southwest has been profitable year after year because of good management and for a long time was a great value for the price. I would say the reasons many airlines failed was because of very poor management not because their fares were to low if anything the reason people say this is because airlines didn't charge enough to make up for their bad managing or recourses. Now with most of the competition eliminated through mergers they can basically call the shots in the market always charging more to cover their blunders sort of like when airlines were regulated


You are going to call a company greedy when you don’t know what the term net margin means?

There is one way to get cheaper tickets and that is lower expenses. So what do you support? Should we pay pilots less? Cabin crew? How about we fire all the baggage handlers and replace them with robots? What cost do you propose to cut exactly to get ticket cost down or increase service?
 
DFWAviator76
Posts: 72
Joined: Fri Oct 27, 2017 7:10 pm

Re: How to Revive Airline Competition

Fri Mar 02, 2018 5:32 pm

klm617 wrote:
commavia wrote:
In 2017, on an income statement/accrual accounting basis, AA generated a net margin of 4.5%, United generated a net margin of 5.6%, and Delta generated a net margin of 8.7%. I'm still waiting for a single cogent argument - just one! - as to why any one of those numbers is in any way excessive or unreasonable, let alone constitutes "everything" going to shareholders in the form of "pure profit." The irony is that the airlines in the U.S. that often produce the highest margins are the ones most effective at doing the things that many love to complain about so much, like fare unbundling and ancillary fees.

The disconnect from economic reality remains stunning. Airlines are for-profit businesses owned by their shareholders, and their entire reason for existence is to create economic value which - finally - they're doing, to the tune of, essentially, 5-9% per year. I've been saying for years, and to this day, I continue to be dumbfounded by the fact that people seem to have such a problem with airlines making money. It is as if, after the first three decades of deregulation, some people became so conditioned to airlines offering irrational fares, and destroying astounding amounts of capital in the process, that such individuals are literally offended by the prospect of airlines stopping such economically unsustainable insanity.



First of all let's go a step further what are the margins that BA, LH, AF and KL operate at and the we can get a better picture of if the US3 is to greedy or not. So those margins include all the incidental fees or just based on the ticket price paid ? Southwest has been profitable year after year because of good management and for a long time was a great value for the price. I would say the reasons many airlines failed was because of very poor management not because their fares were to low if anything the reason people say this is because airlines didn't charge enough to make up for their bad managing or recourses. Now with most of the competition eliminated through mergers they can basically call the shots in the market always charging more to cover their blunders sort of like when airlines were regulated

First of all, let's be clear: the "competition" that was "eliminated" via mergers, by and large, wasn't what you would call the "good" competition. PanAm and Eastern were "eliminated" not by mergers but poor management. TWA would have been liquidated if it weren't for AA purchasing it. The list goes on and on. There are many issues surrounding the history of airline service, profitability, customer satisfaction, and the like, but the overarching fact remains that, in a post-deregulation world, the "legacy" carriers had to deal with a multitude of changes to their business model. The most dramatic effect was that customers, by and large, made their airline decisions almost exclusively on price. Trying to survive in that new world took time, and many carriers didn't make it because they weren't nimble or smart enough. Others have made it, and even thrived. And, for customers willing to pay a true market price for the privilege, they have in-flight luxuries few could have imagined even 20 years ago.
 
UpNAWAy
Posts: 506
Joined: Thu Aug 11, 2016 12:42 pm

Re: How to Revive Airline Competition

Fri Mar 02, 2018 6:15 pm

mia wrote:
I look at flights to New Orleans from New York, and South Florida from New York. You used to be able to find $200-$250 on the routes for a weekend trip. Now, the only way to find those fares is to fly on a Wednesday or morning on Saturday and fly back Tuesday morning. We do not have enough real competition.



And they made zero money on those fares and filed BK every 5-10 years. You realize the big 3 made more profit last summer than in their entire previous history? You also are not counting inflation tickets are still relatively low compared to most other things we buy. A stable, slightly profitable (margin wise) industry even with slightly higher fares is in everyone's best interest.
Also the airlines are not spending all of this money on new, reconfigured interiors just to be mean and cheap they are actually running tons of data that tells them this is what the consumers are willing to pay for.
 
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EightyFour
Posts: 75
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 6:43 pm

DFWAviator76 wrote:
EightyFour wrote:
XAM2175 wrote:

It's a magical thought but I have to wonder how in reality this would work. Its not like you can say "hi I'd like to pay a little bit more for 31" pitch and a slightly-less begrudging smile from the FA please, but not as much as I'd need to pay for an emergency exit row, two checked bags, and a three-course meal".

So voting with your wallet becomes a fairly ineffectual choice between
A) Vaguely-similar airlines all with vaguely-similar products so you end up choosing based on schedule and overall cost anyway
B) Other transportation choices (and all that wallet-voting for Amtrak is really doing them a world of good...)
C) Not travelling at all
and D) paying for Y+/W/J etc... which, guess what, reinforces the entire point of making Y as unpleasant as the market will bear!


This is exactly it. I want to pay more for a better seat, but I can't justify paying double price to get premium economy. I'd love to be able to for example pay 50-70 usd more to get a 9 abreast seat in a 777, but I'm not able to.


Why can't you justify it? Obviously, other people do; otherwise, the airlines wouldn't be able to sell those Premium Economy seats.


That's the point, I don't want to pay double the economy fare to get a wider seat, more pitch, better food, more luggage, and better service, when all I want is to pay slightly more to just get a wider seat (more pitch I can take or leave). I was underlining the point that voting with your wallet isn't always an option due to a) large steps between service levels, and b) differing needs and preferences from the customers side.

In purely economical terms, I prefer to pay 500 to sit in 10ab economy for 12 hours, rather than paying 1200 for premium economy on the same route, when what I *actually* want is to pay 570 to sit in 9ab economy. Other people will have different cost/benefit curves and might go for premium economy, business, first, a private jet, or just stay at home.

I hope this makes it more clear :)
 
klm617
Posts: 4339
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Re: How to Revive Airline Competition

Fri Mar 02, 2018 6:52 pm

DFWAviator76 wrote:
klm617 wrote:
commavia wrote:
In 2017, on an income statement/accrual accounting basis, AA generated a net margin of 4.5%, United generated a net margin of 5.6%, and Delta generated a net margin of 8.7%. I'm still waiting for a single cogent argument - just one! - as to why any one of those numbers is in any way excessive or unreasonable, let alone constitutes "everything" going to shareholders in the form of "pure profit." The irony is that the airlines in the U.S. that often produce the highest margins are the ones most effective at doing the things that many love to complain about so much, like fare unbundling and ancillary fees.

The disconnect from economic reality remains stunning. Airlines are for-profit businesses owned by their shareholders, and their entire reason for existence is to create economic value which - finally - they're doing, to the tune of, essentially, 5-9% per year. I've been saying for years, and to this day, I continue to be dumbfounded by the fact that people seem to have such a problem with airlines making money. It is as if, after the first three decades of deregulation, some people became so conditioned to airlines offering irrational fares, and destroying astounding amounts of capital in the process, that such individuals are literally offended by the prospect of airlines stopping such economically unsustainable insanity.



First of all let's go a step further what are the margins that BA, LH, AF and KL operate at and the we can get a better picture of if the US3 is to greedy or not. So those margins include all the incidental fees or just based on the ticket price paid ? Southwest has been profitable year after year because of good management and for a long time was a great value for the price. I would say the reasons many airlines failed was because of very poor management not because their fares were to low if anything the reason people say this is because airlines didn't charge enough to make up for their bad managing or recourses. Now with most of the competition eliminated through mergers they can basically call the shots in the market always charging more to cover their blunders sort of like when airlines were regulated

First of all, let's be clear: the "competition" that was "eliminated" via mergers, by and large, wasn't what you would call the "good" competition. PanAm and Eastern were "eliminated" not by mergers but poor management. TWA would have been liquidated if it weren't for AA purchasing it. The list goes on and on. There are many issues surrounding the history of airline service, profitability, customer satisfaction, and the like, but the overarching fact remains that, in a post-deregulation world, the "legacy" carriers had to deal with a multitude of changes to their business model. The most dramatic effect was that customers, by and large, made their airline decisions almost exclusively on price. Trying to survive in that new world took time, and many carriers didn't make it because they weren't nimble or smart enough. Others have made it, and even thrived. And, for customers willing to pay a true market price for the privilege, they have in-flight luxuries few could have imagined even 20 years ago.



Let's face it though the only reason they survived is because of the elimination of the competition. They haven't made it because they were significantly better than the others. They just bought them up until there was nobody left but the big 3. The only really well run airlines have been AS and WN and they have survived everything but not wanting the whole pie but just a portion of the pie. The real problem is everybody thought they had to fly everywhere to be profitable and as AS and WN proved that is not the case. We give credit to the airlines for being well run now but the reality is the only reason they can turn the profits they do now is because of lack of customer choice for 75% of the US traveling public. Outside of the top ten metro areas in the US you are pretty much screwed at getting a reasonable fare.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
joeman
Posts: 820
Joined: Fri Apr 22, 2005 11:55 am

Re: How to Revive Airline Competition

Fri Mar 02, 2018 6:55 pm

klm617 wrote:
c933103 wrote:
Is there currently not enough competition among airlines in the states?



The najot markets will always have enough competetion but in secondary market the competition suffers.

Our ivory tower friends always find a way to dispute this concept. Secondary markets are always and primarily well served thru their favorite hubs, let's keep it that way.
 
DarthLobster
Posts: 340
Joined: Thu Feb 25, 2016 3:40 am

Re: How to Revive Airline Competition

Fri Mar 02, 2018 7:11 pm

US airlines are plenty competitive as it is. Now if it’s service you want improved, that starts with the paying passengers. They’ve proven time and time again they’d rather save a few bucks and get crap accomodations (ie the ULCC garbage currently plowing the skies on behalf of the Big Lots crowds) then pay a little more and be treated like a human.

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