[AADFW]

Originally Posted by jimworcs

Burgers,

The US Airline industry is in chaos. Every single one of the major carriers has filed bankruptcy and had to restructure. In the process, they shafted their suppliers, ripped up employee contracts, messed with staff pensions and walked away from many of their other obligations. Meanwhile, their management walked away with huge "performance-related" bonuses and massive unjustified salary and incentives. They were then rewarded with anti-trust immunity, protection from competition, protection from foreign ownership and allowed to form anti-competitive "hubs", which control the markets. Persistent historical losses indicate a failing market, not incredible "consumer value". There are many international airlines which compete on price and quality of service and are profitable. If you look at skytrax, you can track the decline of the services of US based airlines and their reputation internationally.

You are clearly a successful businessman... it is surprising to me that you would consider the market for air travel to be working in the US given the barriers to entry for new airlines, the strength of the hubs and their anti-competitive impact and the decline in service standards. These things are not inevitable, but it seems US airlines and their costly and extensive lobbyists appear to have convinced the public it is.

Jim, I fully agree with everything in your post except the first sentence. The US airline industry is most definitely not in chaos. US carriers are expected to generate around $3.6 billion in profits in 2013, much higher than $2.3 billion earned last year. North American airlines have achieved this robust growth potential through the end of 2013 by virtue of disciplined capacity, rising travel demand and all of these annoying fees or "ancillary revenues" in airline vernacular. U.S. carriers are performing quite well in terms of the DOT customer service parameters including on-time arrivals, lost luggage, customer complaints to the government, rates of cancellation and overbooking of flights. But we all know the service totally sucks on the human level, and the "gotcha" fee-based revenue model borders on dishonest. Economists argue that airlines are only meeting the desires of US consumers who over and over again have voted with their wallets en masse. Most Americans would pay $5 for a ticket from NY to LA if it meant cramming themselves into the cargo hold, yet complain bitterly about the legroom and lack of service throughout. Domestic US airline seats have tragically become a commodity and the US airlines are well aware of this. The bottom feeding American airline consumers have destroyed the quality of domestic service even for those of us willing to pay for it. Sadly, the current earnings approach by the airlines is actually working very well, serving to turn a nice profit after years of loss. Service-based attempts at differentiation during the earlier post-deregulation period failed miserably. The average airline consumer has, in effect, become his own worst enemy.