Originally Posted by
ksweeney
Government pushing prices down via blocking this merger only works as long as the carriers remain in business. Most of the discussions on AA emerging from bankruptcy as a viable carrier have been based on a merger. Is AA as a standalone carrier a viable long term option? Nothing in the AA business model has really been changed by the bankruptcy, other than reducing some expenses that will eventually trickle back in. If the government wishes to keep fares down by favoring UA and DL over AA and US, it might succeed for a while but what if AA and US fail? What will happen to prices when it is just UA and DL? Blocking this merger might have made more sense had they also blocked DL/NW and UA/CO.
I could not agree more! I don't understand why people are so happy that competition between airlines make them undercut each other's prices to below actual cost? It is all very good as long as you can buy those fares and fly, but what if some/all of them fail? Businesses can't survive without making profits. Yields per passengers are minuscule - it is not as if airlines were ripping off passengers.
At the end of the day there will be as many airlines as the market can support with fares that the airlines can actually make money with, so it does not matter whether that'll happen though mergers or though unfortunate demise of some airlines but routes/fares will come to the level where they are sustainable.