Super Competitive US Airlines

E-mail to Congress:

EIN News says, "U.S. Airlines' Attempt to Increase Fares Fizzles. U.S. airlines' second attempt of 2010 to raise ticket prices has fizzled, with major carriers pulling back fares over the long holiday weekend, according to Farecompare.com. (reuters.com)".

Warning! Please do not look at this as another opportunity for a stupid bailout. Let's first understand the situation.

From other sources, I have heard that airlines are not making money. The attempt to increase fares was an attempt to increase revenues, without an increase in costs, in order to make some profit. This is what private companies should do. However in this case, there are too many competitors, which have driven prices down below a reasonable operating level. These excess competitors will not allow price raising.

The only solution is to have the least efficient suppliers go out of business, which would then allow the remaining competitors to raise prices to a profitable level.

Government interference by bailout of the least competitive suppliers will only persist a non-realistic loss level in the industry as a whole. We have already seen this in the case of automobile manufacturers. Bailout of General Motors only exacerbated the losses of the automobile industry as a whole. Sooner or later the number of suppliers must be materially reduced, in order for the most efficient to remain in business and supply public needs. I say that only from a capitalistic point of view. From a Marxist point of view, government could continue to subsidize all forms of inefficiency until such time as the whole system collapses.