The various bankruptcies and mergers have reduced the major U.S. airlines down to four mega-carriers:

 
click for ginormous graphic


Source: CNN/Money

Category: Digital Media, M&A, Travel

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

31 Responses to “How the USA Ended up with only 4 Airlines”

  1. R24C4U says:

    What about Virgin America? It’s small but growing.

    Regarding merging to make bigger Airlines:

    Is bigger better for the Company? Is it better for the consumers? Is it better for both? Is it better for neither?

    Is it better for shareholders? Is it better for senior management? Is it better for both? Is it better for neither?

    And the answer is …………….

  2. S Brennan says:

    Hmmm…if that’s a question, I’d say, in order of importance, Fuel contracts, legacy labor agreements from regulation days and the always present, delusional management?

  3. Bob A says:

    get ready to pay more for worse service

  4. S Brennan says:

    Both Capitalism & Communism deplore a free market, only New Deal policies found a happy medium between these two extremists points of view.

  5. ellidc says:

    Kind of a short timeline, would have like to have seen Pan Am, National, Braniff, Eastern, Frontier, Western, Ozark, quite a few others of course. It really used to be different.

  6. RPL says:

    Quick now, name another country that has even 4 airlines left. Oh, you can’t. Tells you a lot about the inherent problems of the business doesn’t it?

  7. Cato says:

    UK: IAG; easyjet; Virgin Atlantic (just); Flybe.. etc. Germany: Lufthansa; Air Berlin; Condor; Germanwings; etc. Could go on with many others like China, Australia etc. I think the issue is more of having too many large airlines all competing for the same markets rather than trying to find individual niches/specialities – perhaps the day of the all encompassing ‘flag carrier’ is over…?

  8. Julia Chestnut says:

    If airline service gets yet worse and more expensive, I believe we’ll see a resurgence of other modes of transportation. The only reason people fly now is because their time is so cramped and mutilated that they don’t have a choice. Push just a bit farther, perhaps people will decide it’s no longer worth the indignities.

    This industry, apparently, should never have been deregulated. If RPL is right about the “inherent problems of the business,” and everyone else has national airlines that are regulated by the state, it seems like the sensible path.

    Some things are necessary, but don’t function well left to their own devices.

  9. you know, there are ‘more than 4′..

    http://finviz.com/screener.ashx?v=111&f=geo_usa,ind_regionalairlines

    http://finviz.com/screener.ashx?v=111&f=geo_usa,ind_majorairlines

    we should, merely, “Hope” that the flyways don’t “Change” into (resembling) http://wikitravel.org/en/Rail_travel_in_the_United_States .. anymore than they, already, do..

    ~~~

    BR: 4 majors — the rest are smaller regional players

  10. BusSchDean says:

    The airlines are EXPERTS at price discrimination, their financial modeling would rival some of what you guys see on WS. The larger the market share, the more fine-tuned the price discrimination model. I recently paid $9 extra each way for a few more inches of leg room (insert joke here) on a trip to Pittsburgh. Unfortunately, the industry seems to knowing only pricing – that’s it – except for a few in-flight jokes on Southwest. What we need is modern day George Pullman.

  11. danm says:

    One heck of an investor subsidized industry… the question is after how many losses and write downs will investors stop throwing money at these companies?

    Once all the government legacy infrastructure & flying stock is depreciated, it will be interesting to see how many routes will survive and if the middle class will still be able to afford to fly… in Canada anyway… not sure how nationalized it was in the US.

    IMO, the masses can fly for cheap because, since the deregulation, we have been benefitting for huge government investment. However, the infra is ageing… I’m not sure we’ll be able to keep this business operating the way it has.

    Huge changes in the structures of our economy are coming our way…

  12. Moopheus says:

    In other words, the airline industry has followed the pattern of nearly every other industry in America since the 1960s–decades of bankruptcies, mergers, and acquisitions leaving a very small number of big players and a larger number of small players. The real question is not why this happened to airlines, but why would you expect airlines to be different?

    For myself, I mostly use Jetblue for my (infrequent) domestic travel.

  13. danm says:

    This is one of these industries that if you privatize completely will shrink, becomes very expensive and will only serve the top 5-10%.

    This sector is like the railroads of the 1800s… it is not profitable but it keeps the country together and helps other sectors make profits.

    That’s when socialism kicks in…

  14. danm says:

    acquisitions leaving a very small number of big players and a larger number of small players. The real question is not why this happened to airlines, but why would you expect airlines to be different?
    ———–
    And most of the smaller players are eating the bigger players’ lunch. The big players are stuck offering service on unprofitable routes while the smaller players only tap the more lucrative routes reducing the bigger players potential to recoup money on the money losing lines.

    All in the name of competition… fake competition that is.

  15. louiswi says:

    It will be interesting to see when the #4 bar gets the dots. Without the dots, there wouldn’t be any air transportion industry at all.

  16. rd says:

    You forgot to show the creation of TSA into the equation.

    Security theater now costs so much time that driving is clearly the preferred mode of travel for any car trip of less than 4-5 hours. That did not use to be the case.

    Frequently I can get through security in airports in under 20 minutes but there have been enough times when it takes 45 minutes or more that you have to block out 1.5 hours or more at the airport to be sure you will make a flight. By the time you add in the frequent flight delays and cancellations, what used to be a 2-3 hour trip now can easily turn into a 5+ hour marathon.

  17. hue says:

    Airlines, utilities, telecom … perhaps these industries should have never been deregulated, high cost of entry and didn’t spur competition. kind of like banks, and big box retailers, computer makers, cell phone makers, not saying the latter should be regulated. we have nothing but a few giant monopolies in most industries

    Genealogy of US Airlines http://bit.ly/12nr6E9 this graphic, chart go back to the 1920s, hard to see the entire thing, but you can click and zoom

  18. Oral Hazard says:

    Some of us are old enough to remember Eastern, Allegheny and Pan Am.

  19. hue says:

    sorry, didn’t notice RPL, Julia already mentioned the regulation thing

  20. S Brennan says:

    SKU’s are declining at break neck speed.

    FYI, Barry the same thing has been going on in the big box stores, now that the market has been conquered and there are effectively only large players eating at the “consumers” trough…SKU’s are declining at break neck speed.

    Wander through Lowes and check out the single offering of store branded Vacs, or choice of ONE tape manufacturer…it’s far more like the Soviet System of the 60′s than out own of the same time period.

  21. willid3 says:

    always see that high labor cost thing from business. even though in the airline business, that wasn’t really what cost them the most. in the most recent example, AA, their fuel costs went from about 1 billion a year, to over 4 billion a year. and rising. their labor costs didnt go up much at all. if any. so why did AA gripe about labor costs/ because they can’t control the other and they needed to do some thing to show investors they were ‘serious’ about solving their problem. even if they weren’t.
    and we keep getting sold that deregulation, but it seems we rarely if ever get the benefits. and even air lines deregulation has worked as advertized. as we now have fewer and carriers. and we get worse and worse service for higher prices

  22. danm says:

    S Brennan:

    Don’t shop in Canada… I’m like a kid in a candy store when I go to the US.

  23. Theravadin says:

    All of which goes to show why I fly Alaskan when-ever possible…

  24. S Brennan says:

    Danm,

    Canada has a VAT tax, the US doesn’t. Canada tariffs goods proportionally, the US allows a 25% tariff on it’s products going to China while allowing Chinese goods to be tariffed at 2.5%.

    That’s the reason you love to shop in the USA, the Canadian government is protecting YOUR job, YOUR income. The cheapest price in the world won’t do you a bit of good, if all you income is spent on day to day necessities…

    When you start paying 950.00/month for HEALTH insurance premiums that have less care and higher co-pays than you now enjoy…give me a call, we can go shopping in working poor areas and I’ll show you how trade policies have affected the working poor. Whether it’s the backstreets of Honolulu, or the working slums of Compton/North Long Beach, the local residents will be happy to meet you when you flash your cash.

  25. danm says:

    S Brennan:

    There are less interesting jobs for the educated in Canada… all the good research/marketing jobs are in the US. The unemployment rate in Canada is just as bad as in the US. If the government is protecting my job, it’s doing a really bad job!

    Canada used to have upward mobility but the neoliberal infiltration has led to the same level of wealth concentration as in the US… Cdns don’t realize it yet because houses have not tanked YET. I can easily find all the data I want in the US… in Canada, it’s quite opaque.

    One thing I do enjoy in Canada is not feeling like I have to live in a gated community and knowing that everyone has health coverage. But the taxes we pay amount to the insurance premiums you must pay. And the system is getting really stretched…. I think it’s going to get bad in the next few years… in the 50-60s they built schools for the Boomers. They still haven’t started building more hospitals… all they keep on building are expensive retirement homes with Gourmet kitchens. I guess our retirees will be eating granite. Take a drive in the coutryside, 5000 square foot homes have been popping up like mushrooms.

    Go to this website and plug in your income… compare your taxes to ours. http://www.ey.com/CA/en/Services/Tax/Tax-Calculators-2012-Personal-Tax

  26. hammerandtong2001 says:

    Eastern…The Wings of Man.

    .

  27. S Brennan says:

    Danm,

    “There are less interesting jobs for the educated in Canada… all the good research/marketing jobs are in the US”

    This is supposed to be reciprocal

    “TN (Trade NAFTA) status is a special non-immigrant status in the United States unique to citizens of Canada and Mexico. Beginning in 1988, individuals practising one of the professions identified in the Canada – United States Free Trade Agreement are able to obtain TN status for legal work in the United States and Canada, creating freedom of labor movement.”

    But…

    Canada requires a market survey to be paid by the employer for each employee. It’s ~1,000.00USD, in my case I was denied 2 times out of 2 and fellow US citizens report similar numbers, meanwhile three of the people I share cocktails with are Canadian citizens who work in the US under TN visas. It doesn’t surprise me that Canadians are unaware of this…that’s par for the course when you reap the benefit.

    950.00 spent on insurance represents about 1200-1400.00 USD in pretax income, I find it hard to believe a Canadian making US median income which is something like 23,000.00USD/yr is paying 14,000 in medical taxes alone…in fact I find the claim ridiculous as that would mean you are paying 62% of your income to medical tax.

  28. danm says:

    S Brennan:

    LOL! We’re 10X less people in Canada… NAFTA is a farce… may as well become an extra State. If we let in all educated and talented people from the US, Canadians should not even bother going to University!

    Our job market is shallow.
    - Many companies in Canada are subsidiaries of US businesses… all research and decision making jobs are in the US.
    - A large percentage of scientific research is done in the military… Canada’s military budget is puny.
    - Canadians are riskophobes…economy too small to diversify risk… private equity funds are limited.
    - Cdn companies are cheap… will piggyback on US stuff.

    Of course, the one making 24K is not paying 14K in medical taxes… that’s why the one making 100-125K is probably paying 25-30K.

  29. danm says:

    Speaking of NAFTA, did I mention that the US slapped Canada with stiff lumber tariffs
    on its forest products during the real estate bubble under the pretext Canada was dumping?

    In fact, the Cdn dollar was trading at an all time low of 63-65 cents. It was not dumping, it was just benefitting from a very low dollar…. but the US could not let Canada benefit in any sort of way.

    The USA never gives other countries a break so I guess its quid pro quo.

  30. petessake says:

    In most of the US’s interventionist history in the 20th century when we intervened in the 3d world and strove to rebuild those nations’ economies one of the first and lasting items was to break up the monopolies, oligarchies, 13 families, mega land holdings – all in efforts to economically empower people. It’s amazing how we abjectly fail to practice that here. Instead we are beholden to the monopolistic, corporate bigger is better, fewer more wealthy is our real model. This will end badly.

  31. Crocodile Chuck says:

    Folks, we’re dealing with a capital intensive, decentralised service industry, captive to forces beyond its control (oil prices on supply side; the business cycle on the demand side), whose assets have a nasty habit of falling out of the sky and killing all their customers.

    In 1992 alone, the industry collectively wrote off more $ than its CUMULATIVE profits since the inception of civil aviation.

    Ante up!