Originally Posted by
bocastephen
In theory perhaps, but in practice a free market economy and unregulated airline industry will just open access to new players coming in to fill the vacuum. Consolidate too much and your more nimble competitors will fill the gap, and take your customers by offering a better product for the same price, or a simplified product for a lower price.
If the industry constrains too much, expect to see a new startup or two pop up with an innovative business model and a much leaner cost structure. The TPAC market is just aching for a LCC offering a solid, comfortable product that eats UA (and DL, AA) alive.
That is what we've already seen. WN is eating the legacy's lunch. Jetblue, Virgin, Spirit etc. Some will be successful and some won't be. But there's no denying that WN has been on a 20+ yr growth path, whereas the majors consolidate and shrink. If the only way the can stay afloat is to artificially shirnk capacity to raise prices (ie merge and shrink), then their models are ultimately destined to fail which i think is what we've seen.
i don't like what smisek's doing to the airline, but i do admit, he's trying some things and clearly a different model is needed. Now, I think unfortunately he chose a worse model than what UA had before his takeover and i think the financials show that. but really, both UA and CO needed a business model change. I just think smisek made some very poor choices in the changes he's made. so far, not so good. but time will tell. he will either be a hero or he might look at the board and tell them they've been punked, thank them for the millions in comp and go walk away to his happy place.