To the airline industry…
Sorry. But you are nobody special.
It would seem the market is about to deal the airline industry a dose of reality. The reason why fares are perpetually low is not simply because passengers demand them, as is often pointed out on the news reports, but due to the fact that there are too many available seats for the number of passengers to fill them. Just like with every other product or service that is available, air travel is subject to the reality of supply and demand.
In all honesty, immediately after 9/11 I thought under the circumstances it was important to keep the airline industry viable as a show of resilience to our attackers. I didn’t think it was wise to let an industry as large and important as is air travel collapse in the face of a terror attack. Not to mention the havoc such a catastrophic collapse would wreak on the economy with so many jobs lost as well as the added downward pressure on the stock market.
In hindsight, I was weak. I think maybe it wasn’t such a good idea to prop-up the industry. Perhaps public assistance was justifiable for a month or three to account for the extreme circumstances created by the attacks. After that, especially when the management problems in many airline outfits started to become obvious, the industry should have been left to the sometimes cruel mercies of market forces.
Back then at least no one was flying. The pain to the nation outside of the affected companies would have been minimized. The stock market was in steep decline anyway. A few of the worst managed airlines going down in flames would have been like adding some wood to an already hot bonfire. Now, several airlines going down will be like throwing gasoline on a smoldering fire. With the market struggling around 10,000 for… how long now, a year, two… the collapse of an industry will likely receive a cool reception in the investment community.
Yes, it would have been better to get all the pain and suffering over with back then. To any argument against allowing market forces to sort out the airline industry, I point to Southwest, who has consistently been profitable while the other carriers whine, cry, and bemoan their fate as they go broke. If one carrier can manage to be profitable while operating under the same conditions as it’s competitor’s, little excuse is left for other reasons–especially when investors and tax-payers are being asked to foot the bill.
Consider, in the years since 2001 there are probably several entrepreneurs who have been kept out of the airline industry because poorly managed carriers have been kept alive by artificial means, like government largesse. Huge carriers going out of business will not be bad for America. It will be bad for the employees and stockholders of those poorly managed companies but consumers will benefit from the many new carriers that will inevitably spring to life to fill the need of the consumer. Imagine the friendly service consumers will receive from a few dozen small, profitable companies as opposed to what is received from the massive, lumbering, money-losing operations flying the sky’s today.
Its hard to be friendly when you are bleeding to the tune of billions of dollars a year.