The legacy carriers had to go bankrupt because their original business models and labor costs were based on regulation and would not work once regulation was re

The legacy carriers had to go bankrupt because their original business models and labor costs were based on regulation and would not work once regulation was removed. Regulation created a huge market failure, a market inefficiency while deregulation made the market more efficient. The wages/benefits of labor were negotiated by unions that made the labor costs non-competitive with airlines that launched after deregulation. There may have been issues of operational inefficiency as well that was supported by the extra profits above an efficient market under regulation. Capitalists generally do not want market efficiency when it comes to providing a product or service but for customers that is the best deal. Firms fight commoditization of their product or service and tried to create "moats" that protect their business from competition. Looking for good investments is often a case of looking for businesses that can't easily be commoditized. Columbia Profs. Bruce Greenwald and (also Nobelist) George Stiglitz sometimes co-teach a course. Greenwald talks about making moats and Stiglitz talks about commoditizing to make products/services more accessible to people with lower incomes.