I'm not disagreeing with your premises here, just amplifying on them.
"Jay Honeck" wrote in message
news:rY4We.351954$xm3.256217@attbi_s21...
> > Anyway, it seems like some more consolidation among the majors will be
> > needed in the future. There isn't really a need for more than three
> > major airlines, probably AA, DL (merged with CO and NW), and UA
> > (merged with US).
>
> Absolutely. The reason the airlines are in this mess is because Congress
> refuses to let any major airline FAIL.
Well, there is the minor matter that until the US Airways/America West
merger, the administration also refused to allow mergers. Mergers provide a
rational, orderly reduction of capacity. Bankruptcy is a weapon of mass
destruction if reducing excess capacity is your goal.
> Unfortunately, that's what capitalism requires for success. In a truly
free market,
...the government would have been open to proposals for mergers.
> the surviving airlines would feed on the carcass of a truly bankrupt
> airline, plucking the profitable routes and leaving the deadwood behind.
That already happens. You don't need bankruptcy for that.
> In our current dream-world of "protected deregulation", Congress keeps
> bailing out failing airlines, allowing them to continue operating at
> below-profitable levels
That goes all the way back to the Airline Deregulation Act of 1978, where
Congress hedged its bets by providing "Essential Air Service" subsidies.
The problem has been that Congress and consumers want it both ways -
competition resulting in cheaper fares, while maintaining the expectation of
service levels that were possible under regulated pricing.
> -- which means they can continue to charge less than
> what it really costs to fly the routes, which, in turn, means that NONE of
> the airlines can charge what it actually costs to fly.
True as far as it goes, but there are other factors that have undercut
airlines' ability to set pricing or clear a profit, such as Internet fare
shopping (which the airlines foolishly embraced at first), the rising cost
of oil (even the carriers in bankruptcy would have had operating profits
except for rising fuel prices), the way that the government has treated
airlines as a cash cow (the taxes on a typical airline ticket are higher
than the "sin taxes" on alcohol and tobacco).
The irony here is that allowing airlines to go into bankruptcy allows them a
competitive edge over solvent carriers. The solution is to reduce the
period for management to have exclusionary control over the enterprise, and
not allow a bankrupt carrier to expand operations.
> Until the Feds let Northworst and Delta fail, this situation will continue
to get worse.
That's one solution, but not the only one. There are more rational
approaches to the capacity problem.
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