The Persistant Financial Losses of U.S. Airlines

Could this have anything to do with security theater? Check out the synopsis from Severin Borenstein’s new working paper:

U.S. airlines have lost nearly $60 billion (2009 dollars) in domestic markets since deregulation, most of it in the last decade.

More than 30 years after domestic airline markets were deregulated, the dismal financial record is a puzzle that challenges the economics of deregulation. I examine some of the most common explanations among industry participants, analysts, and researchers — including high taxes and fuel costs, weak demand, and competition from lower-cost airlines. Descriptive statistics suggest that high taxes have been at most a minor factor and fuel costs shocks played a role only in the last few years.

Major drivers seem to be the severe demand downturn after 9/11 — demand remained much weaker in 2009 than it was in 2000 — and the large cost differential between legacy airlines and the low-cost carriers, which has persisted even as their price differentials have greatly declined.

5 thoughts on “The Persistant Financial Losses of U.S. Airlines

  1. in answer to your opening question, for me, “yes, security theater = i am driving 20 hours on next week’s 3 day brother trip–such trips previously included flying.”

  2. Security theater would end if corporate media would inform the public about the truth of 9/11 – but corporate media can’t do that because they have played what is arguably as critical a role in the 9/11 hoax as the bush administration, which orchestrated the entire operation.

  3. I agree with Dr. TOM. Pre-2001, I used to fly as much as possible. But after that, and especially in the last 12 months or so, with the TSA’s most recent nonsense, I switched to a “fly-on-an-as-needed-basis”. And it’s not because of the airlines. It’s entirely because of the security theater and lack of respect we receive at the airport.
    If I don’t have to travel by plane, I will drive. Went to Colorado from Houston over New Years and loved every minute of it. I’ve rediscovered the wonders of the road trip in the past few years. Until they treat us with a little dignity, I won’t fly unless I absolutely have to.

  4. “AB” —
    Do you ever wonder WHY we have security theater?
    Do politicians lie? Would they lie about 9/11?
    How would you know, unless you learn more about
    what happened? HINT: They would and did lie about
    9/11, but at least you’ve now rediscovered the wonders of road trips…until TSA begins including security theater on interstate highways.

  5. Security theater has cost the airlines thousands of my dollars. Driving to Colorado with the family of 4 for spring break. Anyone who can watch a video of WTC 7 and tell me a fire brought it down has lost their ability to reason.

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