Skeptic asked: Since airline deregulation, the airlines have lost about $14.00 per passenger ticket. This essentially transfers wealth from airline stockholders (and sometimes lenders) to passengers.
Good management and fuel hedging has kept Southwest in the black, but that is going away as fuel costs overwhelm the company and fuel cost hedging is no longer available. Airlines have no good short-term options, but to discount tickets to fill excess capacity (in order to contribute to the overhead – they still have capital expenses).
These companies need to raise prices (maybe reducing passenger miles). The only way I know that this is collusion… How can airlines temper the short-term negative impacts of “free markets” through industry cooperation?
Do you have a solution or do we let good companies and their employees fend for themselves under a “free market” that’s not quite as rational as John Smith would have had us believe?
Rachel
