Originally Posted by
pbarnette
This assumes that there is a sufficient market for that product and service to warrant differentiation.
It also assumes that a "free" market approach without significant regulation is a workable and sustainable model in the long term: the evidence so far points to this not being the case.
Originally Posted by
pbarnette
The reality is that, for most US domestic flights, it is a commodity because the value to the consumer of better service or hard product on a 3-hour flight is exceedingly low and you would never be able to recover the extra costs required to provide it.
Pricing to recover costs is not rocket science. Regulated utilities ranging from water to electricity to public transportation do it all the time. The US did it successfully for decades in the airline industry.
Originally Posted by
pbarnette
I seriously doubt that any airline could come up with a suite of products that provided sufficient utility to the customer at a cost that made it profitable, at least for anything beyond a very small network. You might see some boutique carriers try this angle (VX, for example, plans to serve something like 20 cities, max), but for any large, network carrier, the ROI for the investments in "quality" would almost certainly be negative.
Honestly, I struggle to understand why people keep barking for the airlines to compete on product and service.
Probably because they are so dissatisfied with the unacceptably low levels of product, service and safety that have resulted from so-called "free" markets that are mainly successful at lowering the price while ignoring the significant costs of having too low prices.
You are probably right that the market fails both the majority of consumers (that wants to have safe and decent service without exploiting employees) and the airlines (that want to compete without resorting to cutting deals with the government to engage in otherwise illegal behavior of unilaterally cancelling labor contracts and being exempt from prosecution for anti-competitive behavior).
There have been numerous interventions into the functioning of the airline market in the US. Unfortunately, most have been in the interest of propping up failed legacy carriers, abusing bankruptcy courts, exploiting employees and cutting corners on safety rather than in the interest of the flying public.
It is time that the market start to be subjected to some groundrules that force it to meet minimum standards of quality.
Originally Posted by
pbarnette
Many tried this and they all failed. Consumers have consistently voted for the lesser but cheaper product in the short-haul market. This is true in the US, it is true in Europe, it is true in Oceania, and it appears to be true in Asia. WN kicked the legacies' butts when they were still full-service. Ryanair kicked the legacies' butts when they were still full-service. Air Asia has been exceedingly successful in a market dominated by some of the "best" airlines in the business. There is simply zero evidence that quality trumps price.
Now, long-haul is a bit of a different beast, but even there, there is a lot of pressure on price and the market for premium services is relatively small and seemingly getting smaller. There again, the only way to be successful by appealing to notions of quality is to be a niche carrier.
"Quality" and "Premium Service" are not the same thing and are not interchangeable terms. One can offer premium service of very poor quality (such as the FC product in the states) and one can offer very high quality standard or economy product (if one does not passively release control of decisions about safety, minimum service levels, etc. to the whims of an imperfect market).