Page 1 of 2 12 LastLast
Results 1 to 30 of 37

Thread: How the Airlines Became Abusive Cartels

  1. #1

    Default How the Airlines Became Abusive Cartels

    https://www.nytimes.com/2017/04/17/o...e-cartels.html

    By ROBERT KUTTNER, APRIL 17, 2017



    The recent United Airlines bumping debacle has prompted calls for reforms in the system of auctions that reward fliers for voluntarily giving up seats. Delta Airlines has now authorized payments as high as $9,950 to induce passengers to give up seats on overbooked flights.

    But no refinement of voluntary market remedies will fix the deeper mess of the airline industry. For air travel is far from a free market.

    When the airlines were deregulated in 1978, economists led by Alfred Kahn, then chairman of the Civil Aeronautics Board, argued that airlines and airline tickets were really like any other free-market product. He called them “marginal costs with wings.” Nearly 40 years of deregulation have disproved that premise.

    Previously, the C.A.B. had ever since the 1930s regulated both fares and routes and guaranteed the airlines a decent but not exorbitant profit. The airlines, in turn, had the predictability to invest in new generations of more fuel-efficient aircraft, which allowed fares to drop over time. Prices actually dropped at a faster rate in the decades before deregulation than afterward.

    Kahn believed that if new competitors could enter markets and charge whatever prices they liked, fares would drop even faster and more people would fly. But airlines do in fact have fixed costs in the form of expensive capital equipment. And one seat is pretty much like another — as economists say, there is little product differentiation — so in a competitive free-for-all, everyone goes broke.

    In the first years of deregulation, there was too much competition and the airlines collectively lost a fortune. Their strategy was to consolidate. All 21 of the proposed mergers presented to Reagan administration antitrust officials in the 1980s were approved, and some 20 more have been approved in the years since.

    The airlines devised frequent flier programs and “fortress hubs” to maximize their pricing power. Carriers knew to stay out of each other’s hubs. By 1988, 85 percent of airline markets had only two airlines competing, and they closely monitored each other’s fares, so that true price competition was rare.

    An industry that is not naturally competitive went from being a regulated cartel, to a brief period of ruinous competition, and then to an unregulated cartel — with predictable effects on the quality of service. This restored profitability, but at awful costs both to customer convenience and to economic efficiency as well.

    With the hub-and-spoke system used to defend airlines’ pricing power, there are fewer nonstops. Passengers waste time and often miss connections, while airlines waste fuel.

    Flying more miles than necessary to reach a destination is known in the industry as circuity. All of these profit-gouging strategies add up to a false brand of “efficiency” that actually increases the system’s costs at passenger expense.

    Today’s auction system on oversold flights, ironically, is the stepchild of a 1976 Supreme Court case, Nader vs. Allegheny, in which the late and little lamented Allegheny Airlines (known to its long suffering passengers as Agony Airlines) picked the wrong passenger to bump. Ralph Nader sued and the case went all the way to the Supreme Court.

    The high Court, in a 9-0 ruling, held that if a passenger had a confirmed ticket, the airline was committing a fraudulent act by bumping him. (Allegheny, fittingly, became USAir, which was merged into American.) After a search for remedies, the industry eventually came up with — what else — a wondrous market solution: the auction.

    But in an industry that is not naturally competitive, tweaking market incentives will not fix what’s broken. For starters, planes should not be permitted to fly so full. That leaves no room for contingencies.

    When weather or mechanical problems or crew delays cause cancellations, the airlines have great difficulty accommodating passengers because there is not enough slack in the system. Leaving a few empty seats would increase the system’s efficiency overall.

    Also, we need rules limiting penalties for changing flights. In life, it’s normal for plans to sometimes change. The airlines disparage this as “no-shows,” but in fact these are bona fide needs to revise travel times, usually hours or days in advance. Few passengers are literal no-shows.

    There should also be rules on how many passengers an airline can cram into a plane, and what extras it can charge for. And there should be limits on price gouging. It makes no sense to allow airlines to charge an astronomical fare just because a flight is nearly full, and a dirt-cheap fare for an advance booking.

    Would rules like these destroy the airlines’ business model? Ask Amtrak, which hauls three times the passengers between New York and Washington as all airlines combined, and doesn’t punish you for canceling a ticket. Or ask Southwest Airlines, which never charges a fee for changing flights and has no hidden extra charges.

    The current business model used by the big airlines is not the only one consistent with reasonable profit and good service. It simply reflects the sheer arrogance that comes with monopoly power.

    Beyond that, there is too much concentration in the industry. The Federal Trade Commission or the Justice Department’s Antitrust Division should take a close look, and if rules like these don’t do the trick, the biggest carriers should be broken up.

    Elsewhere in the travel industry — hotels and car rental agencies, for example — these abuses do not exist because there is actual competition. But airlines are simply not naturally competitive.

    There is a middle ground between an abusive cartel and a ruinous free-for-all in the skies. It’s known as regulated competition.

    Correction: April 17, 2017
    An earlier version of this article misstated the merger history of USAir. It merged into American Airlines, not into United.
    The essential English leadership secret does not depend on particular intelligence. Rather, it depends on a remarkably stupid thick-headedness. The English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous.



  2. Remove this section of ads by registering.
  3. #2

    Default

    Airlines suck so I am giving this five stars based on the title and the fact somebody gave it one star.

  4. #3

    Default

    Quote Originally Posted by oyarde View Post
    Airlines suck so I am giving this five stars based on the title and the fact somebody gave it one star.
    I'm giving it 5 stars based on the fact that you gave it 5 stars.
    Theye have refused their Assent to Laws, the most wholesome and necessary for the public good.

    Theye have erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.

    Theye kept among us, in times of peace, Standing Armies

    Theye have combined with others to subject us to a jurisdiction foreign to our constitution,

    For protecting them, by a mock Trial from punishment for any Murders which they should commit on the Inhabitants of these States:

    For cutting off our Trade with parts of the world:

    For imposing Taxes on us without our Consent:

    For depriving us in many cases, of the benefit of Trial by Jury:

    Theye plundered and destroyed the lives of our people.

    Theye are at this time transporting Armies of Mercenaries to compleat the works of death, desolation, and tyranny, already begun with circumstances of Cruelty & Perfidy scarcely paralleled in the most barbarous ages, and totally unworthy of a civilized nation.

  5. #4

    Default

    This article is basically calling for more regulation. I think that is a bad idea.

    To be fair, I think the idea that the airlines involuntary bumping someone is a violation of property rights is an interesting one...you bought the ticket; whether you fly it or not, isn't it yours? I'm also dubious off all the double-speak and false-advertising airlines companies engage in.

    But I generally am against regulating the industry.

  6. #5

    Default

    In before all the bootlickers tell you how fantastic the crappy ass airlines are .LOL

  7. #6

    Default

    If airlines did not suck , I could arm myself while flying .

  8. #7

    Default

    Airlines do suck . They do not deserve your business . Never use them unless you have to . Only way to improve them is to put them all under.

  9. #8

    Default

    Quote Originally Posted by Dr.No. View Post
    This article is basically calling for more regulation. I think that is a bad idea.

    To be fair, I think the idea that the airlines involuntary bumping someone is a violation of property rights is an interesting one...you bought the ticket; whether you fly it or not, isn't it yours? I'm also dubious off all the double-speak and false-advertising airlines companies engage in.

    But I generally am against regulating the industry.
    One could not find a more regulated industry. So regulated it's created monopolies. Go figure.
    Theye have refused their Assent to Laws, the most wholesome and necessary for the public good.

    Theye have erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.

    Theye kept among us, in times of peace, Standing Armies

    Theye have combined with others to subject us to a jurisdiction foreign to our constitution,

    For protecting them, by a mock Trial from punishment for any Murders which they should commit on the Inhabitants of these States:

    For cutting off our Trade with parts of the world:

    For imposing Taxes on us without our Consent:

    For depriving us in many cases, of the benefit of Trial by Jury:

    Theye plundered and destroyed the lives of our people.

    Theye are at this time transporting Armies of Mercenaries to compleat the works of death, desolation, and tyranny, already begun with circumstances of Cruelty & Perfidy scarcely paralleled in the most barbarous ages, and totally unworthy of a civilized nation.

  10. #9

    Default

    Quote Originally Posted by oyarde View Post
    If airlines did not suck , I could arm myself while flying .
    Or not. I suppose that would depend on the owner and whether they were willing to accept responsibility for safe travel after disarmament.
    Theye have refused their Assent to Laws, the most wholesome and necessary for the public good.

    Theye have erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.

    Theye kept among us, in times of peace, Standing Armies

    Theye have combined with others to subject us to a jurisdiction foreign to our constitution,

    For protecting them, by a mock Trial from punishment for any Murders which they should commit on the Inhabitants of these States:

    For cutting off our Trade with parts of the world:

    For imposing Taxes on us without our Consent:

    For depriving us in many cases, of the benefit of Trial by Jury:

    Theye plundered and destroyed the lives of our people.

    Theye are at this time transporting Armies of Mercenaries to compleat the works of death, desolation, and tyranny, already begun with circumstances of Cruelty & Perfidy scarcely paralleled in the most barbarous ages, and totally unworthy of a civilized nation.

  11. #10

    Default

    Quote Originally Posted by phill4paul View Post
    One could not find a more regulated industry. So regulated it's created monopolies. Go figure.
    Without the monopoly they might have to treat customers like , well customers . Fact is none of these have the ability or skills to do that because they have been removed from it for so long . If they all go belly up whatever comes after might be an improvement .

  12. #11

    Default

    Quote Originally Posted by oyarde View Post
    Without the monopoly they might have to treat customers like , well customers . Fact is none of these have the ability or skills to do that because they have been removed from it for so long . If they all go belly up whatever comes after might be an improvement .
    Treating cattle like customers would be a better way. It would be better to refer to you as oyarde instead of "Occupant of seat A1A."
    Theye have refused their Assent to Laws, the most wholesome and necessary for the public good.

    Theye have erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.

    Theye kept among us, in times of peace, Standing Armies

    Theye have combined with others to subject us to a jurisdiction foreign to our constitution,

    For protecting them, by a mock Trial from punishment for any Murders which they should commit on the Inhabitants of these States:

    For cutting off our Trade with parts of the world:

    For imposing Taxes on us without our Consent:

    For depriving us in many cases, of the benefit of Trial by Jury:

    Theye plundered and destroyed the lives of our people.

    Theye are at this time transporting Armies of Mercenaries to compleat the works of death, desolation, and tyranny, already begun with circumstances of Cruelty & Perfidy scarcely paralleled in the most barbarous ages, and totally unworthy of a civilized nation.

  13. #12

    Default

    So it's deregulation and exorbitant profits that created the customer-unfriendly skies.
    * Enforce Border Security – America should be guarding her own borders and enforcing her own laws instead of policing the world and implementing UN mandates.

    * No Amnesty - The Obama Administration’s endorsement of so-called “Comprehensive Immigration Reform,” granting amnesty to millions of illegal immigrants, will only encourage more law-breaking.

    * Abolish the Welfare State – Taxpayers cannot continue to pay the high costs to sustain this powerful incentive for illegal immigration. As Milton Friedman famously said, you can’t have open borders and a welfare state.

    * End Birthright Citizenship – As long as illegal immigrants know their children born here will be granted U.S. citizenship, we’ll never be able to control our immigration problem.




    Reprinted from http://www.ronpaul2012.com/the-issues/immigration/ [Nov. 29, 2011]

  14. #13

    Default

    Quote Originally Posted by angelatc View Post
    So it's deregulation and exorbitant profits that created the customer-unfriendly skies.
    Things were so much better befoe deregulation from the Carter administration...you only had to pay a lot more to fly with more limited schedules...
    Quote Originally Posted by juleswin View Post
    Just for the record, 99% of the time I say "In my country........" I am actually messing with you people because I know you guys have absolutely no idea what happens in my country.

    Quiz: Test Your "Income" Tax IQ!


    Short Income Tax Video

    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of apportionment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

  15. #14

    Default

    Quote Originally Posted by phill4paul View Post
    One could not find a more regulated industry. So regulated it's created monopolies. Go figure.
    Really? Monopolies that cause airlines to hemorrhage money year after year? Profit margins are so thin for airlines. Costs are going way down, employee benefits are generally going up, and return on capital is constantly shrinking...that is the opposite of a monopolized industry.

  16. #15

    Default

    Quote Originally Posted by Danke View Post
    Things were so much better befoe deregulation from the Carter administration...you only had to pay a lot more to fly with more limited schedules...
    That was sarcasm.
    * Enforce Border Security – America should be guarding her own borders and enforcing her own laws instead of policing the world and implementing UN mandates.

    * No Amnesty - The Obama Administration’s endorsement of so-called “Comprehensive Immigration Reform,” granting amnesty to millions of illegal immigrants, will only encourage more law-breaking.

    * Abolish the Welfare State – Taxpayers cannot continue to pay the high costs to sustain this powerful incentive for illegal immigration. As Milton Friedman famously said, you can’t have open borders and a welfare state.

    * End Birthright Citizenship – As long as illegal immigrants know their children born here will be granted U.S. citizenship, we’ll never be able to control our immigration problem.




    Reprinted from http://www.ronpaul2012.com/the-issues/immigration/ [Nov. 29, 2011]

  17. #16

    Default

    Quote Originally Posted by angelatc View Post
    That was sarcasm.
    I know you, so I knew that.
    Quote Originally Posted by juleswin View Post
    Just for the record, 99% of the time I say "In my country........" I am actually messing with you people because I know you guys have absolutely no idea what happens in my country.

    Quiz: Test Your "Income" Tax IQ!


    Short Income Tax Video

    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of apportionment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

  18. #17

    Default

    Quote Originally Posted by Danke View Post
    Things were so much better befoe deregulation from the Carter administration...you only had to pay a lot more to fly with more limited schedules...
    May be no real difference . 8.42 Cents per mile of flight pd in 1977 , 13.5 cents per mile of flight in 2009 . A NY to LA round trip ticket cost about 200 in 1958.
    Last edited by oyarde; 04-19-2017 at 10:34 PM.

  19. #18

    Default

    Quote Originally Posted by oyarde View Post
    May be no real difference. 8.42 Cents per mile of flight pd in 1977, 13.5 cents per mile of flight in 2009. A NY to LA round trip ticket cost about 200 in 1958.
    You know you have to look at those numbers in context?

    Not only the increased times, dates, routes, etc. but the fact that wages have nearly tripled since 1977, personal income and disposable income are up nearly 10x, inflation has more than doubled, etc.

  20. #19

    Default

    Quote Originally Posted by Dr.No. View Post
    You know you have to look at those numbers in context?

    Not only the increased times, dates, routes, etc. but the fact that wages have nearly tripled since 1977, personal income and disposable income are up nearly 10x, inflation has more than doubled, etc.
    Matters not , none of it explains the 99 percent drop in quality of customer service .

  21. #20

    Default

    Quote Originally Posted by oyarde View Post
    Matters not , none of it explains the 99 percent drop in quality of customer service .
    Cut your hair and put on western clothes next time you fly. The service will be much better.
    Quote Originally Posted by juleswin View Post
    Just for the record, 99% of the time I say "In my country........" I am actually messing with you people because I know you guys have absolutely no idea what happens in my country.

    Quiz: Test Your "Income" Tax IQ!


    Short Income Tax Video

    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of apportionment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

  22. #21

    Default

    Quote Originally Posted by oyarde View Post
    Matters not , none of it explains the 99 percent drop in quality of customer service .
    Is that quantifiable?

  23. #22

    Default

    Quote Originally Posted by Danke View Post
    Cut your hair and put on western clothes next time you fly. The service will be much better.
    I got a haircut yesterday . I was overdue. Now I must look like Samson did , but I can still kill a lion . I have lots of western clothes . Summertime is comfy with blue jeans and a tomahawk .

  24. #23

    Default

    Quote Originally Posted by Dr.No. View Post
    Is that quantifiable?
    Yeah pretty much . 1980 I put muh pistol in my pocket , board , get my peanuts , beer & bourbon in the smoking section . Go ahead and try to slide through today with a loaded pistol , sit , light up a smoke and demand peanuts . LOL

  25. #24

    Default

    Quote Originally Posted by oyarde View Post
    Yeah pretty much . 1980 I put muh pistol in my pocket , board , get my peanuts , beer & bourbon in the smoking section . Go ahead and try to slide through today with a loaded pistol , sit , light up a smoke and demand peanuts . LOL
    Peanuts are still there. Beer and bourbon are available for purchase. I'm not sure how being allowed to have a gun or smoke is "customer service". I'd argue that for the vast majority of passengers, you not being able to smoke is customer service; same with you not being allowed to have a gun.

  26. #25

    Default

    Quote Originally Posted by Dr.No. View Post
    Peanuts are still there. Beer and bourbon are available for purchase. I'm not sure how being allowed to have a gun or smoke is "customer service". I'd argue that for the vast majority of passengers, you not being able to smoke is customer service; same with you not being allowed to have a gun.
    It is people like you that ruin it for the rest of us normal folks .

  27. #26

    Default

    Quote Originally Posted by oyarde View Post
    ...us normal folks .
    ]
    Quote Originally Posted by juleswin View Post
    Just for the record, 99% of the time I say "In my country........" I am actually messing with you people because I know you guys have absolutely no idea what happens in my country.

    Quiz: Test Your "Income" Tax IQ!


    Short Income Tax Video

    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of apportionment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

  28. #27

    Default

    Quote Originally Posted by Danke View Post
    ]
    When one is in my presence they can feel the aura of american exceptionalism exude from my pores .

  29. #28

    Default

    Quote Originally Posted by oyarde View Post
    I got a haircut yesterday . I was overdue. Now I must look like Samson did , but I can still kill a lion . I have lots of western clothes . Summertime is comfy with blue jeans and a tomahawk .
    Poor uncle oyarde. Pity you let silly fake Muricans like danke bully you into cutting off your proper warrior mane. Now you have to wear the more elaborate warrior head dress all the time till it grows back.
    Quote Originally Posted by Torchbearer
    what works can never be discussed online. there is only one language the government understands, and until the people start speaking it by the magazine full... things will remain the same.
    Hear/buy my music here "government is the enemy of liberty"-RPEphesians 6:12 (KJV)For we wrestle not against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this world, against spiritual wickedness in high places.

  30. #29

    Default

    Quote Originally Posted by Dr.No. View Post
    Peanuts are still there. Beer and bourbon are available for purchase. I'm not sure how being allowed to have a gun or smoke is "customer service". I'd argue that for the vast majority of passengers, you not being able to smoke is customer service; same with you not being allowed to have a gun.
    You must be trolling , 'mericans are not allowed to have peanuts anymore . They are all allergic .

  31. #30

    Default

    Quote Originally Posted by oyarde View Post
    You must be trolling , 'mericans are not allowed to have peanuts anymore . They are all allergic .
    WHAT?!!! I haven't flown in more than 20 years, so I didn't know this... WTF? I'm not allergic to peanuts...
    Quote Originally Posted by Torchbearer
    what works can never be discussed online. there is only one language the government understands, and until the people start speaking it by the magazine full... things will remain the same.
    Hear/buy my music here "government is the enemy of liberty"-RPEphesians 6:12 (KJV)For we wrestle not against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this world, against spiritual wickedness in high places.

Page 1 of 2 12 LastLast





Similar Threads

  1. Chinese bludgeon abusive kops
    By tod evans in forum U.S. Political News
    Replies: 7
    Last Post: 04-21-2014, 10:50 AM
  2. cop smacks abusive teacher in the face
    By Petar in forum Open Discussion
    Replies: 6
    Last Post: 02-03-2013, 01:21 AM
  3. Ten Signs You're in an Abusive Relationship (with your government)
    By W. E. Messamore in forum U.S. Political News
    Replies: 2
    Last Post: 02-28-2012, 03:55 PM
  4. Herman Cain Abusive towards whole classes of people
    By SpiritOf1776_J4 in forum 2012 Presidential Election
    Replies: 2
    Last Post: 11-08-2011, 02:36 PM
  5. 'Abusive Soldiers' were Palestinian Authority Teens
    By ElyaKatz in forum Open Discussion
    Replies: 51
    Last Post: 08-24-2009, 12:49 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •