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Airline CEOs say the only way they can compete is to have less competition!

A long time ago I lived in Texas, and one of the (few) high points of my stay there was reading Jim Hightower. So I was pleasantly surprised to see him still fighting the good fight in an article about the airlines.

Apparently, a number of airline CEOs are claiming that the problem with the American aviation business is that there are too many airlines. As the former chairman of Continental Airlines put it “I mean, do we really need 19 domestic airlines in the United States? I think three or four network airlines would still give you plenty of competition.” The airline CEOs are promoting a rash of mergers and acquisitions to consolidate the industry into fewer and bigger corporations.

You know, just like the banking industry, the American automotive industry, the American healthcare industry, the corporate-owned media, and all those other “too big to fail” companies that are now screwing us over in one way or another.

Says a top official at American Airlines, “We have an industry that is too fragmented, with too many competitors and with different ideas of capacity, pricing and strategic activity.”

No, we can’t have any of that nasty competition here! What do Americans think we are? A free enterprise system with open markets? Hah!

But go read Jim’s take on all this. I can only dream of writing like he does.

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12 Comments

  1. Ok, but no. There *are* far too many airlines serving the US, and often serving the US the same ways (same major cities on hub-and-spoke systems).

    There’s also a number of lower cost airlines serving cities on a direct flight / non-hub-and-spoke system.

    There’s very little serving remote areas, even when the remote areas have sufficient wealth to support a passenger airport.

    What we need is to thin the herd: there’s too many, especially of the hub-and-spoke system. The airline executives are correct about that. What we need, though, is to not “save” all those jobs through mergers(ie. the executives and their favorites, while everyone else is laid off as “redundant”.) What we need is to either stick to the free market-esque guns and tell the companies that are in trouble to declare bankruptcy (which will at least get the executives into the same spot as the rest of the workers). Or we could (but won’t) insist that the companies merge into something closer to a utility, and make the new “airline” accountable to the US people, including serving those remote areas.

    But, of course, the airline execs just can’t see either of those possibilities–nope, can’t see it. They got to keep having their good paying jobs with no accountability to the US people (just some shareholders, many of whom are represented through fund-managers: the banks).

    Sorry, had to vent. I’m one of the few people who likes to fly, but haven’t done so in years. I’m priced out of the market (the local city is one of the five most expensive to fly into/out of). And even if I wasn’t priced out of the market, I’ve been hearing the horror stories of flying these days. I have fond memories of going to the local airport just to watch the planes–one of the town’s best restaurants was in the observation deck (and it was served by a regional airline).

    Thursday, April 22, 2010 at 1:34 am | Permalink
  2. Sammy wrote:

    Yeah, because having one cable TV provider per market has worked SO well in keeping costs down.

    Thursday, April 22, 2010 at 10:00 am | Permalink
  3. Sammy, true. But how well have those monopolies been regulated? If we did turn the airlines into something closer to a utility, in thoughtdancer-world, those utilities would be regulated.

    Yeah, that bugbear of the Reagan era–get rid of all regulation and we’ll have Morning in America. Well, how well is that working out, overall?

    Yeah, I went there. (I still don’t buy the “trickle-down” theory, if only because a trickle of water is enough to torture someone dying of dehydration.)

    Thursday, April 22, 2010 at 11:49 am | Permalink
  4. Sammy wrote:

    TD: Possibly true, but it wasn’t until the cable companies had competition (and then local TV competition) from the satellite dish companies did service improve, technology improve and cost containment really start to happen.

    Thursday, April 22, 2010 at 2:54 pm | Permalink
  5. Sammy. Ok. I’ve not had TV for years, so I’ll take your word. That might be a good counter-example. ๐Ÿ™‚

    So, what the airlines need is to 1) be allowed to fail 2) have competition from something that gives similar service: how about high speed rail? (Ok, one of my other fantasies is to live in a country where just about everywhere is supported by rail, and all the major cities were connected by high speed rail.)

    Friday, April 23, 2010 at 3:14 am | Permalink
  6. starluna wrote:

    I would like to point out that the deregulation of the airline industry occurred under President Carter. It was actually supported equally by Democrats and Republicans at the time.

    But I do agree with the idea of promoting high speed rail between US cities. I much prefer to take the train even when flying is less expensive and takes less time.

    Friday, April 23, 2010 at 11:53 am | Permalink
  7. Carter? Oops…. *blushes*

    Friday, April 23, 2010 at 12:26 pm | Permalink
  8. Sammy wrote:

    I’m still waiting for the Star Trek transporter technology. ๐Ÿ˜‰

    Friday, April 23, 2010 at 2:05 pm | Permalink
  9. Iron Knee wrote:

    Yup, Carter. See http://en.wikipedia.org/wiki/Airline_Deregulation_Act (there is even a photo of him signing the bill) and Ted Kennedy was the major legislator behind the bill, along with Howard Cannon (another Dem). Who says Democrats only want increased regulation?

    Interestingly enough, most of the big airlines were against airline deregulation, since profits were virtually guaranteed under the old system.

    Friday, April 23, 2010 at 4:17 pm | Permalink
  10. starluna wrote:

    Sammy, if you have the kind of family that I have, you would definitely not want transporter technology.

    Friday, April 23, 2010 at 8:54 pm | Permalink
  11. Starluna. You and me both. I’m happy being multiple states away from my family of origin. ๐Ÿ˜‰

    Saturday, April 24, 2010 at 10:06 am | Permalink
  12. Dan wrote:

    Interesting discussion, but no surprise.

    Everyone claims to support the idea of competition, as long as no one is competing with you.

    Anyone who has ever worked anywhere knows that removing (not undercutting!) competitors is one of the main perpetual objectives of any business!

    Monday, April 26, 2010 at 7:50 am | Permalink