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> Commercial flight has been a race to the bottom for years now Which is exactly how a free market works. When there is a profit to be made from the sale of a

> Commercial flight has been a race to the bottom for years now Which is exactly how a free market works. When there is a profit to be made from the sale of a product, so basic microeconomics theory goes, competitors will arise to undercut current players, until everyone's profit margin converges to zero. This mechanism is supposed to incentivize innovation and productivity improvements.

beisner 4y ago
There are extreme barriers to entry for airplane manufacturing. You can’t just get a couple million dollars from some VC and have an MVP 747 in 6 months. There’s a reason that only 2.5 (.5 being COMAC) companies in the world that produce commercial airliners. A new player has to have tens of billions of dollars in investment and also be willing to wait 10-15 years before a single plane is approved by the FAA and other regulatory bodies, and unless you have a radically different airframe (Boom, etc) your company will directly compete on price with Boeing and Airbus, who have a 100 year head start. There’s also a strong incentive to not let Boeing go under, because 1.5 airline companies is dramatically worse for [safety, cost, innovation] than having 2.5. So not only is it NOT a free market (MASSIVE long-term investment plus enormous warranted regulatory burden), but we don’t want it to be one! Because we don’t ever ever want Boeing or Airbus to fail because that would be devastating to national security and safety etc. All this is to say that “a race to the bottom” in this context is maybe more harmful than in other markets, because there really isn’t much backpressure (outside regulatory oversight) to keep standards high.
- etempleton 4y ago
  I have to imagine part of the move is to convince politicians on both sides that Boeing is an important and strategic asset to the United States and should be supported accordingly. Using the fear of a Chinese company entering the space should to convince most.
- iancmceachern 4y ago
  I agree with everything here. I want to add that in addition to all the other barriers to entry you listed that a very robust support and repair infrastructure needs to be in place. These planes need careful care and feeding. Also want to add that Embraer is another .5 in your list, Brazilian plane maker that actually makes quite a few fairly large planes. https://en.m.wikipedia.org/wiki/Embraer https://en.m.wikipedia.org/wiki/Embraer
etempleton 4y ago
Oh, I completely agree. And competition is almost always a good thing. However, corner cutting for something like a commercial airliner is negligent if it has an impact on safety. We are lucky it did not have a bigger impact on human lives. Hopefully this is a lesson well learned.

beisner 4y ago

There are extreme barriers to entry for airplane manufacturing. You can’t just get a couple million dollars from some VC and have an MVP 747 in 6 months. There’s a reason that only 2.5 (.5 being COMAC) companies in the world that produce commercial airliners. A new player has to have tens of billions of dollars in investment and also be willing to wait 10-15 years before a single plane is approved by the FAA and other regulatory bodies, and unless you have a radically different airframe (Boom, etc) your company will directly compete on price with Boeing and Airbus, who have a 100 year head start. There’s also a strong incentive to not let Boeing go under, because 1.5 airline companies is dramatically worse for [safety, cost, innovation] than having 2.5. So not only is it NOT a free market (MASSIVE long-term investment plus enormous warranted regulatory burden), but we don’t want it to be one! Because we don’t ever ever want Boeing or Airbus to fail because that would be devastating to national security and safety etc. All this is to say that “a race to the bottom” in this context is maybe more harmful than in other markets, because there really isn’t much backpressure (outside regulatory oversight) to keep standards high.

etempleton 4y ago
I have to imagine part of the move is to convince politicians on both sides that Boeing is an important and strategic asset to the United States and should be supported accordingly. Using the fear of a Chinese company entering the space should to convince most.
iancmceachern 4y ago
I agree with everything here. I want to add that in addition to all the other barriers to entry you listed that a very robust support and repair infrastructure needs to be in place. These planes need careful care and feeding. Also want to add that Embraer is another .5 in your list, Brazilian plane maker that actually makes quite a few fairly large planes. https://en.m.wikipedia.org/wiki/Embraer https://en.m.wikipedia.org/wiki/Embraer

etempleton 4y ago

Oh, I completely agree. And competition is almost always a good thing. However, corner cutting for something like a commercial airliner is negligent if it has an impact on safety. We are lucky it did not have a bigger impact on human lives. Hopefully this is a lesson well learned.