shintao
Take Down ~ Tap Out
- Aug 27, 2010
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Read about airline regulation, son.
Everyone was "neutral" then.
Airline Deregulation: The Concise Encyclopedia of Economics | Library of Economics and Liberty
Airfares, when adjusted for inflation, have fallen 25 percent since 1991, and, according to Clifford Winston and Steven Morrison of the Brookings Institution, are 22 percent lower than they would have been had regulation continued (Morrison and Winston 2000). Since passenger deregulation in 1978, airline prices have fallen 44.9 percent in real terms according to the Air Transport Association. Robert Crandall and Jerry Ellig (1997) estimated that when figures are adjusted for changes in quality and amenities, passengers save $19.4 billion dollars per year from airline deregulation. These savings have been passed on to 80 percent of passengers accounting for 85 percent of passenger miles. The real benefits of airline deregulation are being felt today as never before, with LCCs increasingly gaining market share.
The dollar savings are a direct result of allowing airlines the freedom to innovate in routes and pricing. After deregulation, the airlines quickly moved to a hub-and-spoke system, whereby an airline selected some airport (the hub) as the destination point for flights from a number of origination cities (the spokes). Because the size of the planes used varied according to the travel on that spoke, and since hubs allowed passenger travel to be consolidated in “transfer stations,” capacity utilization (“load factors”increased, allowing fare reduction. The hub-and-spoke model survives among the legacy carriers, but the LCCs—now 30 percent of the market—typically fly point to point. The network hubs model offers consumers more convenience for routes, but point-to-point routes have proven less costly for airlines to implement. Over time, the legacy carriers and the LCCs will likely use some combination of point-to-point and network hubs to capture both economies of scope and pricing advantages.
Thank you & very informative & precise. Yet they still had to be bailed out by Bush. I was thinking the added passenger carrying capacity available today helps lower overall costs as well.
In my lil burg, we used to have a lot of private jets fly commuters to frisco. Don't know what happened to that, but it was a good thing. We are down to jet flights to Phoenix & Las Vegas, and the military uses the strip to teach jumbo jet touch and gos. Some day it will pick up again.
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