Quote:
Originally Posted by Ian_Lee
Why has the domestic air travel deteriorated so much over the years?
Because lack of competition. Now the industry is dominated by the big 3 plus Jetblue + Southwest + some small budget airlines. That is it.
The Sky should be opened. We should open the 5th Freedom of Air and let foreign airlines to come in to compete for business.
|
We did up until fairly recently, have quite an assortment of airlines.
There has not been a new airline started here in the US (that I know of) in almost a decade. Virgin America was the last. I don't count Eastern because it's not really a true scheduled airline; it only flies charters to Cuba. I also don't count PEOPLExress either because that was also not a real airline. Instead an outfit that attempted to lease out and repaint the planes from an existing supplemental charter company and call it an airline. So Virgin was and is the last true standing on its own two feet new start. And it's days are numbered since Alaska decided to buy them out.
But anyway. Since Deregulation, there have been dozens upon dozens upon dozens of airlines that started up and tried to provide competition and choice. Pretty much all either shut down or got bought out. Out of all those carriers, only JetBlue, Frontier, Spirit, and Allegiant remain. That's a pretty dismal record. And that's even before we broach the difficulty of actually getting a new airline off the ground. The certification process is so onerous, expensive, and time consuming that is effectively a de facto embargo against any new start airlines taking flight. Part of this is because of ValuJet #592 from 1996, 9/11, and I'm pretty sure that some of these impediments are in place courtesy of the existing Majors (think: auto franchise protections). Look at the now defunct California Pacific Airlines. They had all their ducks in a row and
still couldn't commence operation. So between the virtually assured 100% failure rate of investing in a new airline and the all-but-impossible to surmount bureaucracy one has to navigate, is it any wonder no one is interested in investing in or launching a new airline anymore? Too much financial risk. Too much hassle and headache.
Let's not forget that we also used to have a lot more majors too.
Eastern, Pan Am, TWA, Northwest, Continental, US Airways, etc.
Some went under because they were too sick to survive. The rest all merged in a panicked knee-jerk reaction to pool resources and yes, eliminate competition and drive up prices.
Indeed I expect to still see MORE mergers in the next several years. Everyone is expecting Frontier and Spirit to join up at some point. Only a matter of time. I would also think that Allegiant and Sun Country make a good fit.
Alaska will prove to have bitten off more than it can chew with Virgin.
The combined company will be picked up by Jet Blue.
-Which in turn will be swallowed by American.
Delta and United will eventually merge.
As will the combined Spirit and Allegiant.
Hawaiian? That's anyone's guess. I can see it going either way where one of the majors snaps them up. Or leaves them alone to eke out their business on one of the lowest yield markets in the world. They might just quietly fizzle out the way Aloha did.
How's THAT for an ologopolistic market? I'm banking on that scenario or one like it being the future (four airlines consisting of two majors, an a-la carte LCC, and Southwest effectively controlling 100% of the US air travel market). And no. I don't think that the DOT or DOJ really have the power to really stop any merger. They can try. And believe me. They have. But to date have not successfully stopped any merger proposal that wasn't already mutually called of by the participants. Back in 2000, they did try to stop the then proposed United/USAirways merger. But that transaction ended up collapsing on its own because the two could not come to terms. They really, really wanted to kibash American/US Airways. But failed there too.
In the end, any merger that gets proposed will eventually be consummated after their cherished baby (Southwest) gets thrown a few slots at space constrained airports and the right officials receive "campaign contributions". That's the way it works.