That's incorrect - you would only expect no "margin" in a perfectly competitive market, which obviously isn't the case in the market for airliners. In markets

That's incorrect - you would only expect no "margin" in a perfectly competitive market, which obviously isn't the case in the market for airliners. In markets where firms have market power, there is an explicit and well-studied phenomenon known as "double marginalization"[1][2], which is what the parent comment is describing. Vertical integration is one possible solution to this problem, although there are other approaches as well. Double marginalization also occurs elsewhere in the air travel industry. Imagine I flew on American Airlines from Charlotte to London, and then continued on British Airways from London to Lyon. If both airlines set their prices independently, then they would both add a markup, and the combined price of the itinerary would be higher than the profit-maximizing price that a single airline would set. In this situation, antitrust authorities will often allow the airlines to form a joint venture and coordinate on price-setting. This reduces horizontal competition (because e.g. AA and BA are no longer competing with one another for passengers on JFK-LHR), but can provide consumer benefits if eliminating double marginalization allows airlines to set their prices lower on multi-airline itineraries. [1] https://en.wikipedia.org/wiki/Double_marginalization https://en.wikipedia.org/wiki/Double_marginalization [2] https://mru.org/courses/development-economics/double-marginalization-problem https://mru.org/courses/development-economics/double-margina...