5 ms·

Airlines are hardly cartels. Cartels make obscene amounts of money, airlines currently make a little money but historically lose. The main issue is price sensi

by rb808 10y ago

Airlines are hardly cartels. Cartels make obscene amounts of money, airlines currently make a little money but historically lose. The main issue is price sensitivity. People would rather pay less and suffer rather than pay full premium prices. As a result people largely get what they're asking for.

ajmurmann 10y ago
Most people also got too infrequently and have too few choices. I get on an airplane at least six times a year and that used to be much more frequent. Because of timing I have done most of my flying recently on Virgin which I fortunately loved (of course that option is gone soon because they got acquired by Alaska who I severely dislike). On the route I fly most my options come down to Virgin, Alaska and United. So at best If haver to fly there times to be able to make a somewhat educated decision about which airline I prefer. That's assuming that my schedule and availability even allowed all three as actual options. Only very few passengers fly that frequently. And now that's actually down to two choices. Given that lack of information and infrequent exposure it's almost impossible to make a decision based on anything but price and convenience of schedule. Even if I've flown a airline on a certain route, the experience on a longer route, especially internationally might still be completely different (and it frequently is). It's really hard for a market to properly function under such conditions.
- harryh 10y ago
  In July, I am taking a vacation to Los Angeles. I haven't been to LA in 10 years or so and I'm unlikely to go back any time soon. One or two of the nights that I am there I would like to go out to a somewhat fancy dinner. But I haven't been to any of my options and I'm very unlikely to visit any of them more than once. Because of my inability to try out all my choices I can see how it's hard for the market of nice restaurants in LA to function properly. Clearly the government should step in and decide what they should cook and how much they should charge for it. There are lots of goods where people don't personally test all the available options where markets work just fine. People can rely on all sorts of recommendations to make informed choices. With the internet this is easier than ever. For everything from LA restaurants to airlines.
  - ajmurmann 10y ago
    This is a interesting point. For some reason there is a huge market of books, magazines and apps offering restaurant recommendations and people are very eager to recommend their favorites in conversations. The same doesn't seem to happen for airlines. Not sure why that is. Maybe we can fix that. I do occasionally hear praise for Soutwest which I personally dislike because their boarding process makes me sort anxious. But then I hardly ever have them as a choice anyway. Maybe we less talk about our favorite airlines because there is little actual choice?
josephscott 10y ago
"airlines currently make a little money" Your definition of "a little money" and mine are very different. The three largest US airlines ( American, Delta, and Southwest ) each had net incomes over $2 billion for 2016. American: $2.6 B Delta: $4.3 B Southwest: $2.2 B
- com2kid 10y ago
  American earner $2.6B on $40.18B of revenue, 6.7% profit margin. Hardly a high margin business.
  - TheGRS 10y ago
    Thats actually much higher than I would have thought, I was under the impression they operated on 1% or less margins. Maybe not a great margin, but 2.6 billion isn't anything to sneeze at.
- coredog64 10y ago
  There's a longstanding joke in the aviation industry. "It's easy to make a small fortune running an airline. Step 1) Start with a large fortune..."
jimlawruk 10y ago
To be a cartel, you simply need to agree to limit supply to keep prices higher. So it sounds more like a cartel of survival rather than to make obscene profits.

by rb808 10y ago

ajmurmann 10y ago

Most people also got too infrequently and have too few choices. I get on an airplane at least six times a year and that used to be much more frequent. Because of timing I have done most of my flying recently on Virgin which I fortunately loved (of course that option is gone soon because they got acquired by Alaska who I severely dislike). On the route I fly most my options come down to Virgin, Alaska and United. So at best If haver to fly there times to be able to make a somewhat educated decision about which airline I prefer. That's assuming that my schedule and availability even allowed all three as actual options. Only very few passengers fly that frequently. And now that's actually down to two choices. Given that lack of information and infrequent exposure it's almost impossible to make a decision based on anything but price and convenience of schedule. Even if I've flown a airline on a certain route, the experience on a longer route, especially internationally might still be completely different (and it frequently is). It's really hard for a market to properly function under such conditions.

harryh 10y ago
In July, I am taking a vacation to Los Angeles. I haven't been to LA in 10 years or so and I'm unlikely to go back any time soon. One or two of the nights that I am there I would like to go out to a somewhat fancy dinner. But I haven't been to any of my options and I'm very unlikely to visit any of them more than once. Because of my inability to try out all my choices I can see how it's hard for the market of nice restaurants in LA to function properly. Clearly the government should step in and decide what they should cook and how much they should charge for it. There are lots of goods where people don't personally test all the available options where markets work just fine. People can rely on all sorts of recommendations to make informed choices. With the internet this is easier than ever. For everything from LA restaurants to airlines.
- ajmurmann 10y ago
  This is a interesting point. For some reason there is a huge market of books, magazines and apps offering restaurant recommendations and people are very eager to recommend their favorites in conversations. The same doesn't seem to happen for airlines. Not sure why that is. Maybe we can fix that. I do occasionally hear praise for Soutwest which I personally dislike because their boarding process makes me sort anxious. But then I hardly ever have them as a choice anyway. Maybe we less talk about our favorite airlines because there is little actual choice?

josephscott 10y ago

"airlines currently make a little money" Your definition of "a little money" and mine are very different. The three largest US airlines ( American, Delta, and Southwest ) each had net incomes over $2 billion for 2016. American: $2.6 B Delta: $4.3 B Southwest: $2.2 B

com2kid 10y ago
American earner $2.6B on $40.18B of revenue, 6.7% profit margin. Hardly a high margin business.
- TheGRS 10y ago
  Thats actually much higher than I would have thought, I was under the impression they operated on 1% or less margins. Maybe not a great margin, but 2.6 billion isn't anything to sneeze at.
coredog64 10y ago
There's a longstanding joke in the aviation industry. "It's easy to make a small fortune running an airline. Step 1) Start with a large fortune..."

jimlawruk 10y ago

To be a cartel, you simply need to agree to limit supply to keep prices higher. So it sounds more like a cartel of survival rather than to make obscene profits.