As stated above, there are certain industries that need a sensible and albeit, necessary level of regulation.
It doesn't take an MBA to know that any industry with large barriers to entry or exit in the marketplace lend themselves to abuse and need a certain amount of regulation.
Our utilities are a perfect example. One only need to look at what's happened in California recently to see what happens when you swing the pendulum too far in either direction. You get a crisis. The airline industry is similar. It's not what most would consider a hard core commodity, but air travel is pretty much indespensible to a large portion of American business.
We simply could not afford the fallout from a deregulated war between the airlines. On the flip side, the government needs to stay out of the market as much as possible to encourage at least some (if not the most) healthy competition as possible (to keep consumers protected by capitalist/competitive pressures).
I think that the petrolium industry is quickly heading in the direction of the utilities industries. Like air travel, it has huge impacts on the performance of our economy (even more so) and if the air or
oil companies can't figure it out, then it's time that Uncle Sam do his job and earn his pay and step in.
I'm not advocating for a huge amount of regulation here, I'm tend to be a libertarian. But I also acknowledge that not EVERYTHING can be a capitalist blood letting. We have some certain "indepensibles" to our civilization and air travel has become one of them (not for leisure obviously, but business and industry).
I've studied case study after case study (the typical how Southwest Airlines became successful type) and something I do not understand is why or how they've all continued to operate on a variable price business model.
When you take a typical charter, whether it's a boat, ferry, bus, etc, it's usually for a small or medium company that knows what it costs to operate that charter. They tack on profit, burden, overhead and what they charge is a standard rate (it may vary by day or holiday or whatever, but it's scheduled and advertised).
If the price of fuel goes up, they publish an announcement that their costs are going up. There's no negotiating the fare. They don't gouge the $hit out of you for traveling over Thanksgiving. They know their costs, they know their profits. The only variable is customer numbers. The way they control that is to operate one vehicle/craft and when that one is overwhelmed to the point that they need another, they start operation of another.
Obviously there's some complexities that can be added in (operating temporary service during peak periods, etc), but the point is, if there's a spectrum, with variable price on one end and fixed price on the other, it seems to me that the variable price model ISN'T working.
I understand that the airline industry has huge capital issues (it's not like you can run out and buy another aircraft off the shelf) and have large variables as to fuel, labor, etc. But I think the model that says "let's operate profitable on our leg from Houston to Tampa" and start from there. If that flight starts filling up, then add another flight for that leg.
It just seems to me (and I'm not an expert, so I'm sure there's going to be some rebuttal here) that the airline industry as a whole is trying to manage chaos and they're getting chopped up in all the dynamics of the market. When you find yourself lost, start at the beginning. Win the next play. Then focus on winning that series. Then the win that half. And before you know it, you've won the game. Win the next game. Then focus on making the playoffs.....etc. etc. etc.
I could sum it up by saying.....can anyone tell me what it will cost to fly from NY to LA this year on the 22nd of December? It'll change 7 ways from Sunday between now and then....because they're trying to leverage as much profit from every passenger as possible. Instead, charge what it costs, add a profit and move on with life. First come, first serve.
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