Ok, Mars, we have had private correspondence about this, but you appear not to understand my position, so I will reinterate it. First, the pattern of the major legacy carriers has been to build up fortress hubs. Do you think this pattern developed by accident? Is it a co-incidence that the major carriers all used the same strategy.. no, it is because they depend on their monopoly in specific markets to distort the market.
The US government has repeatedly refused to allow AA and BA to enter into an alliance. Their argument is that BA's position at LHR amounts to a dominant market position and that any joint AA/BA tie up would have a detrimental effect on competition. (I don't disagree with this analysis). BA has just over a third of the take off and landing slots at LHR.
Delta has almost 60% of the take off and landing slots at Atlanta. If you look at the positions of US Airways in CLT or Philly, Delta/Northwest in Minneapolis & Atlanta, AA in Dallas, etc etc, I think you will find that this dominance is repeated across the States. There are few places with true choice. Even in Chicago, the main airport is effectively a duopoly.
Competition is a complex matter. It is economically niave for Mars and PHX to argue that the relatively small number of routes which have direct "head to head" competition means that no monopoly exists. The lawyers at the airlines want you to think this, but it is far more complex. The key issue is the frequency, timing of slots and overall seat availability on a route. If Delta operate 10 flights per day between Atlanta and Miami and AirTran offers 2, that is not proof of "competition".
The rapid development of fortress hubs following de-regulation was a scramble by the airlines to develop dominant positions in major hubs so that they could control whole markets. The higher paying business passengers, (paid for by corporations or tax write offs) have little realistic choice. The services offered by a few low cost airlines at these hubs are not aimed at business travellers but at leisure travellers. Airlines further entrench their positions by bribing business travellers to use the airlines with frequent flyer miles from which they personally benefit, but which are paid for by corporations and tax write offs.
mars, following our private exchange, I suspect that you don't really understand what a monopoly is.. you seem to think that monopolies can only occur if there is no competition. This is not the definition of a monopoly. I will provide you with it again..
A situation in which a
singlecompanyowns all
or nearly all of the
market for a given type of
product or
service. This would happen in the case that there is a barrier to entry into the
industry that allows the single company to operate without
competition (for example, vast
economies of scale,
barriers to entry, or governmental
regulation). In such an industry
structure, the
producer will often
produce a
volume that is less than the
amount which would maximize
social welfare or charge prices which exploit their position.
Phx, based on our past exchanges, I suspect you know perfectly well that the fortress hubs are effective monopolies.. and just enjoy the sport of the exchange. I hope my answer has satisfied both of your needs!!