I haven't come across a lot of info on this subject, and I find it an interesting and important topic. We constantly hear about how "even Warren Buffett says if you want to lose money, invest in the airline industry" and that without government subsidy air travel would fall apart.
It was nice to see some discussion on the topic, and even better to have someone like Peter Schiff—who is not only an Austrian, but also obviously knows the subject here—to weigh in, as well as correct record...
I just do not see how the Airline sector can be considered deregulated....
My Blog: http://www.anarchico.net/
Production is 'anarchistic' - Ludwig von Mises
The airlines are still allowed to serve water to their customers, and even sparkling one, all without government agents inspecting the process!
So then, are airline companies are free to choose their own flight routes? If not, how is your claim/premise true?
They are not even free to choose time of flights, as many governments regulate take-off/landing hours, as well as vectors. This may be seen as protection of property rights (of the people leaving nearby), except it happens even when the airport was built first, and the appartments were built after.
So are you claiming that airlines aren't deregulated now? ( I am a bit confused on your reply, so if this is not what you meant, can you explain your reply a bit further)
Ryanair is one of the very few airlines who managed to succeed in the present climate. This was achieved by a mixture of careful planning and exploiting government weaknesses. Why I say exploit government weaknesses? You may have noticed Ryanair uses "secondary" airports as much as possible. While these airports are often cheaper than large hubs like Heathrow and the Charles de Gaulle there are other motivations.
The first is large national (privatized in name but in not in fact) carriers have what amounts to vetoing rights to these hubs. Air France has always been very hostile to Ryanair and so was Italy's Alitalia before it folded a couple years ago, requiring "recapitalization" which was really a massive bailout. While Air France has no issues seeing Bulgarian charters landing at CDG during the holiday season they fear Ryanair's competition, and rightly so. There's no way they can compete with the efficient Irish carrier on anything resembling an equal base, mired as they are in politics.
The second is much more subtle. Many secondary airports were built as little more than "make work" projects (like is happening in China right now) and always saw very little traffic. The societies running these airports (often mixed government/private entities) are so desperate to have anyone use their hubs they are often willing to come to humiliating terms (cheap landing and parking rights, discounted fuel, hard cash etc). Ryanair is a household name in Europe: having your airport listed on their website is an incredible occasion to promote yourself.
Ryanair briefly looked into expanding their activities outside of Europe, namely to start a few Transatlantic flights to the US, but decided the game was not worth the effort. Their fleet is completely standarized on middle range airplanes (Boeing 737-700 and -800) and adding a long range hauler like the Boeing 767 or the Airbus 340 would have increased maintenance costs. Moreover the FAA isn't very happy when new foreign carriers try to enter their pond. Remember how they tried to keep out the Concorde? And the Concorde was a State project, fully backed by the French and British governments. The reason given by the FAA (noise levels) sounded ridiculous when US cities were often overflown by USAF T37 trainers, an airplane so silent it was nicknamed "Screaming Mimi".
O'Leary, the present Ryanair CEO, also expressed doubts about the present safety measures which, in his opinion, add absolutely zero to passenger safety while forcing people to arrive to the airport hours in advance. O'Leary understands perfectly well that time is money.
I agree without government subsidies the airline industry would fall apart: large carriers, born and grown in a highly regulated market, would have zero chances to compete with highly efficient newcomers like Ryanair.
Sorry about confusion, I was being sarcastic (or trying to be).
The 1970s airline deregulation was done in North America by, amazingly enough, a Carter Democrat.
Under him, airlines ceased to be a nominally private industry that was effectively owned, controlled, and managed by the government. It's a sign of how even the most statist officials can eventually realize that for them to do their job properly requires curtailing their own powers and working to diminish their own departments.
I don't think there is a party more interested in safety than the own airlines companies. Do these "more regulation" people know how much does a plane cost? How incredibly costly is to pay damages to the families of the victims of an accident? How much higher their insurance costs get?
Supposing that if the government doesn't strongly oversee the airline companies they will just ignore safety has to be one of the most asinine things I've ever heard and a strong testament of how damaging statism is to the brain.
If the airline business was as unregulated as much as the software and computer hardware businesses then we would have Virgin and the like flying planes all over the USA driving Delta, United and American completely out of business. Instead we get a bit of choice as there is a South West among a few others driving down prices. What a stupid business model the big airlines have. That is to provide exactly the same services as your competitors and hope for the best. At least South West and Jet Blue have completely different models.
Isaac "Izzy" Marmolejo:So then, are airline companies are free to choose their own flight routes? If not, how is your claim/premise true?
You said you couldn't see how airlines could be considered deregulated and he replies that they can serve water without it having to be inspected (and ended with an exclamation point)...and you thought he was actually taking the other side of that argument?
@John James
I dont know the guy, I dont know his views on matters, so how was I supposed to know he was being sarcastic? Sarcasm is very easy to spot when you are speaking to people personally, but over a forum, I would say it is more difficult to spot, especially if you do not know the person.
That sarcasm was pretty easy to pick up on.
@Mtn Dew
Well it wasnt to me...
I am sorry, Isaac. You are right, sarcasm is very hard to use correctly online, and I promised myself not to use it, but alas...
Everyone, sorry about derailing the thread.