6 ms·

Is the airline industry disrupt-able enough for market forces to make changes? Consumer choice/efforts are moot in a monopolized sector.

ghaff 8y ago
Market forces have made changes. They've pretty much demonstrated that people make decisions based on the cheapest base fare. So the airlines have mostly (and even the newer airlines have moved in this direction over time) added baggage fees, board early fees, significant change fees, seat selection fees, etc. The frequent fliers are mostly immune to all this and the family visiting grandma is often going to pick the absolute cheapest flight.
- nostrademons 8y ago
  Not entirely - in-flight wifi, extra legroom, lie-flat business class, and seatback-controllable entertainment & food service are innovations that have spread across the industry because carriers found that customers will switch airlines to get access to them. In many cases they're even moneymakers, with customers willing to pay extra for them. I think that the industry has generally found that price-discrimination is a powerful tool, though. The business traveler flying Sydney<->SFO on the corporate dime will pay the extra several thousand for lie-flat seats; the upper-middle-class family with bored kids will pay for wifi and tablet holders; but keeping those (and baggage, prime seat selection, early check-in, etc.) optional keeps flying accessible to the working-class laborer who needs to fly home for a funeral.
  - ghaff 8y ago
    Fully agree. We're really seeing two divergent trends. Fees for everything for the price-sensitive masses. And, for business travelers with status (who are at a minimum less price sensitive and typically don't pay most of the base level fees anyway), somewhat better seating as a perk, much better seating for upgrades/upsells, a premium class of airline clubs among the base level (e.g. United's Polaris Clubs), etc. And, as you say, I don't really have a problem with all this because it makes flying much more affordable for those that find the most bargain economy ticket a big expense. While I might personally enjoy it more, you don't really want a world where lie-flat seats are required on all 5+ hour flights.
- macspoofing 8y ago
  >They've pretty much demonstrated that people make decisions based on the cheapest base fare. Nope. For example the business sector market doesn't necessarily look for cheapest fares. For that market (which is quite big) there are other considerations, like minimizing layovers, in-flight comfort, lounge access, priority boarding, etc.
  - ghaff 8y ago
    Yes, I should have said mainstream personal travel. As someone who travels mostly on business, I'm not the one picking the absolutely cheapest base fee. On the other hand, those business travelers mostly don't even care about early boarding or baggage fees anyway because they're either expensing them or get them for free because of status.
    - dingaling 8y ago
      You are very fortunate. I often flew trans-Atlantic for a former company and their travel secretary was under instructions to find the absolute cheapest fare without consideration. So I occasionally ended-up with weird connections in Manchester or Newark instead of a non-stop from Dublin. Economy class, of course.
- njarboe 8y ago
  Southwest has continued to grow over decades of airline bankruptcies, mergers, and pricing shenanigans. If you are a first class or business traveler, that is what the other airlines are focusing on, go with them. If you are just a regular flyer, southwest focuses on your demographic. Things they do that almost no other US carrier does. Two checked bags are free, good to cheapest fares, same price whether you buy a one-way or round trip, cancel your flight anytime and get full credit for it on your next purchase. These are great features I use all the time. I always fly them if they have non-stop flights to where I need to go.
monochromatic 8y ago
Monopoly means one.
- s73v3r_ 8y ago
  Not in the legal sense, it doesn't
macspoofing 8y ago
>Is the airline industry disrupt-able enough for market forces to make changes? It has been disrupted already ... many times. Some disruptions came as a result of relaxation of certain regulations, such as allowing twin engine jets to fly over the oceans, or not forcing airlines to fly direct routes. There's also the revolution around using deep statistical modeling for capacity and route planning and scheduling. There's the business models of RyanAir and Emirates ... I mean, this industry has changed quite a bit. Flying is also cheapest AND safest it has ever been (though more uncomfortable). Seems like market forces are working just fine.
- jpmoral 8y ago
  I think the 'safest' part is due to regulation, not market forces.
  - macspoofing 8y ago
    Regulations are certainly part of the story, but make no mistake, regulation don't work without market buy-in. If a regulation stands in opposition to market forces it will fail miserably. For example, car fuel efficiency regulations tend to lead to cheating, and non-compliance (which leads to non-enforcement because regulators give up on them) if they stray too far from reality. Furthermore regulations don't innovate. It took aviation engineers to design and build super-safe passenger jets, and airlines (along with engineers) to maintain them - bureaucrats don't do any of that. But yes, regulations have a place.
    - jpmoral 8y ago
      >It took aviation engineers to design and build super-safe passenger jets, and airlines (along with engineers) to maintain them - bureaucrats don't do any of that. Companies won't do that unless forced to by regulations. Also, your post that I replied to implied that it was all market forces.
      - macspoofing 8y ago
amyjess 8y ago
I'd argue that Southwest already did so. This fall I recently started flying again after having not flown since 1999, and I've been making it a point to only fly Southwest because they're the only airline that's even remotely consumer friendly.
- ddingus 8y ago
  Southwest is a pretty great experience. I wish I could use them more.
- dnautics 8y ago
  Alaska is also quite consumer friendly, in my experience.
rayiner 8y ago
The opposite of "monopoly" is not "disruption" but instead "competition." Disruption moves a market equilibrium, usually due to a fundamental change in technology. But even a market in a steady-state equilibrium are subject to market forces so long as they are sufficiently competitive. E.g. Amazon is disrupting retail. But even before Amazon existed, retail was highly competitive, with market forces driving down prices. (Indeed, there is a good argument that Amazon is decreasing competition even as it disrupts the market.)
tathougies 8y ago
The airline industry has a lot of issues, but it's not a monopoly. In fact, the reason we no longer have free bags is that the industry is in a state of price war, due to competition. Airlines want to reduce their ticket costs as much as possible, and this leads to little margin on the tickets, so they save costs by not giving free bags. This helps stratify the market as well, because those who travel light (mainly business people and people who fly a lot) now pay less than they used to. Those who fly irregularly (i.e., tourists) are more willing to pay the fees.
monksy 8y ago
It has been: 1. Wow, WizzAir, and Norweigan air has created a lot of competition on the airline front and price wars. EDIT: Forgot to mention their point to point system has also benefited many towns that wouldn't dream of traveling to Europe. I've flow with Norwegian Air and I actually liked them. They're like the Southwest of transatlantic flights. The legacy carrier's response has been "we'll just lower our prices" and decrease benefits on all sides. (I.e. basic econ) 2. The newer carriers have had the money to lease new airplanes that are much more fuel efficient. I think that's where the legacy carriers have done does bad planning for the last decade. (They're just not buying 787s and they're depending on ERJ/CRJs)
- dawnerd 8y ago
  Problem is those low cost carriers also huge prices away. They’re not always that much cheaper than the legacy carriers - especially if you’re looking at premium econ.
  - monksy 8y ago
    Depends. I frequently see after the flight is priced out. Norweigan+partners can outprice the legacy carriers. Many times they're exactly the same price. Sometime's they're a better value. (I'm looking at Southwest's ticket flexibility as a standard feature)
skookumchuck 8y ago
I remember flying under the old heavily regulated airline system, where the FAA set routes, etc. Flights were often half empty. That practically never happens now. Flights are much more convenient and cheaper as a result.

ghaff 8y ago

Market forces have made changes. They've pretty much demonstrated that people make decisions based on the cheapest base fare. So the airlines have mostly (and even the newer airlines have moved in this direction over time) added baggage fees, board early fees, significant change fees, seat selection fees, etc. The frequent fliers are mostly immune to all this and the family visiting grandma is often going to pick the absolute cheapest flight.

nostrademons 8y ago
Not entirely - in-flight wifi, extra legroom, lie-flat business class, and seatback-controllable entertainment & food service are innovations that have spread across the industry because carriers found that customers will switch airlines to get access to them. In many cases they're even moneymakers, with customers willing to pay extra for them. I think that the industry has generally found that price-discrimination is a powerful tool, though. The business traveler flying Sydney<->SFO on the corporate dime will pay the extra several thousand for lie-flat seats; the upper-middle-class family with bored kids will pay for wifi and tablet holders; but keeping those (and baggage, prime seat selection, early check-in, etc.) optional keeps flying accessible to the working-class laborer who needs to fly home for a funeral.
- ghaff 8y ago
  Fully agree. We're really seeing two divergent trends. Fees for everything for the price-sensitive masses. And, for business travelers with status (who are at a minimum less price sensitive and typically don't pay most of the base level fees anyway), somewhat better seating as a perk, much better seating for upgrades/upsells, a premium class of airline clubs among the base level (e.g. United's Polaris Clubs), etc. And, as you say, I don't really have a problem with all this because it makes flying much more affordable for those that find the most bargain economy ticket a big expense. While I might personally enjoy it more, you don't really want a world where lie-flat seats are required on all 5+ hour flights.
macspoofing 8y ago
>They've pretty much demonstrated that people make decisions based on the cheapest base fare. Nope. For example the business sector market doesn't necessarily look for cheapest fares. For that market (which is quite big) there are other considerations, like minimizing layovers, in-flight comfort, lounge access, priority boarding, etc.
- ghaff 8y ago
  Yes, I should have said mainstream personal travel. As someone who travels mostly on business, I'm not the one picking the absolutely cheapest base fee. On the other hand, those business travelers mostly don't even care about early boarding or baggage fees anyway because they're either expensing them or get them for free because of status.
  - dingaling 8y ago
    You are very fortunate. I often flew trans-Atlantic for a former company and their travel secretary was under instructions to find the absolute cheapest fare without consideration. So I occasionally ended-up with weird connections in Manchester or Newark instead of a non-stop from Dublin. Economy class, of course.
njarboe 8y ago
Southwest has continued to grow over decades of airline bankruptcies, mergers, and pricing shenanigans. If you are a first class or business traveler, that is what the other airlines are focusing on, go with them. If you are just a regular flyer, southwest focuses on your demographic. Things they do that almost no other US carrier does. Two checked bags are free, good to cheapest fares, same price whether you buy a one-way or round trip, cancel your flight anytime and get full credit for it on your next purchase. These are great features I use all the time. I always fly them if they have non-stop flights to where I need to go.

monochromatic 8y ago

Monopoly means one.

s73v3r_ 8y ago
Not in the legal sense, it doesn't

macspoofing 8y ago

>Is the airline industry disrupt-able enough for market forces to make changes? It has been disrupted already ... many times. Some disruptions came as a result of relaxation of certain regulations, such as allowing twin engine jets to fly over the oceans, or not forcing airlines to fly direct routes. There's also the revolution around using deep statistical modeling for capacity and route planning and scheduling. There's the business models of RyanAir and Emirates ... I mean, this industry has changed quite a bit. Flying is also cheapest AND safest it has ever been (though more uncomfortable). Seems like market forces are working just fine.

jpmoral 8y ago
I think the 'safest' part is due to regulation, not market forces.
- macspoofing 8y ago
  Regulations are certainly part of the story, but make no mistake, regulation don't work without market buy-in. If a regulation stands in opposition to market forces it will fail miserably. For example, car fuel efficiency regulations tend to lead to cheating, and non-compliance (which leads to non-enforcement because regulators give up on them) if they stray too far from reality. Furthermore regulations don't innovate. It took aviation engineers to design and build super-safe passenger jets, and airlines (along with engineers) to maintain them - bureaucrats don't do any of that. But yes, regulations have a place.
  - jpmoral 8y ago
    >It took aviation engineers to design and build super-safe passenger jets, and airlines (along with engineers) to maintain them - bureaucrats don't do any of that. Companies won't do that unless forced to by regulations. Also, your post that I replied to implied that it was all market forces.
    - macspoofing 8y ago

amyjess 8y ago

I'd argue that Southwest already did so. This fall I recently started flying again after having not flown since 1999, and I've been making it a point to only fly Southwest because they're the only airline that's even remotely consumer friendly.

ddingus 8y ago
Southwest is a pretty great experience. I wish I could use them more.
dnautics 8y ago
Alaska is also quite consumer friendly, in my experience.

rayiner 8y ago

The opposite of "monopoly" is not "disruption" but instead "competition." Disruption moves a market equilibrium, usually due to a fundamental change in technology. But even a market in a steady-state equilibrium are subject to market forces so long as they are sufficiently competitive. E.g. Amazon is disrupting retail. But even before Amazon existed, retail was highly competitive, with market forces driving down prices. (Indeed, there is a good argument that Amazon is decreasing competition even as it disrupts the market.)

tathougies 8y ago

The airline industry has a lot of issues, but it's not a monopoly. In fact, the reason we no longer have free bags is that the industry is in a state of price war, due to competition. Airlines want to reduce their ticket costs as much as possible, and this leads to little margin on the tickets, so they save costs by not giving free bags. This helps stratify the market as well, because those who travel light (mainly business people and people who fly a lot) now pay less than they used to. Those who fly irregularly (i.e., tourists) are more willing to pay the fees.

monksy 8y ago

It has been: 1. Wow, WizzAir, and Norweigan air has created a lot of competition on the airline front and price wars. EDIT: Forgot to mention their point to point system has also benefited many towns that wouldn't dream of traveling to Europe. I've flow with Norwegian Air and I actually liked them. They're like the Southwest of transatlantic flights. The legacy carrier's response has been "we'll just lower our prices" and decrease benefits on all sides. (I.e. basic econ) 2. The newer carriers have had the money to lease new airplanes that are much more fuel efficient. I think that's where the legacy carriers have done does bad planning for the last decade. (They're just not buying 787s and they're depending on ERJ/CRJs)

dawnerd 8y ago
Problem is those low cost carriers also huge prices away. They’re not always that much cheaper than the legacy carriers - especially if you’re looking at premium econ.
- monksy 8y ago
  Depends. I frequently see after the flight is priced out. Norweigan+partners can outprice the legacy carriers. Many times they're exactly the same price. Sometime's they're a better value. (I'm looking at Southwest's ticket flexibility as a standard feature)

skookumchuck 8y ago

I remember flying under the old heavily regulated airline system, where the FAA set routes, etc. Flights were often half empty. That practically never happens now. Flights are much more convenient and cheaper as a result.