Come Fly With Me

Interesting post on the Aviation industry, Wither Avaition, from Jane Galt. Food for thought here in Northwest's backyard, where the entire MSP airport seems to now be built around, and for, NWA.

Second of all, the business model is terrible. Airlines have a very high fixed cost, which is the cost of flying even if you don't carry any passengers, and a very low marginal cost, which is the cost of carrying each additional passenger. The temptation for airlines to sell empty "extra" seats at a very low price is extremely high. But every time one airline does this, it makes it that much harder for competitors to operate at a profit. Because so many of the costs are fixed, companies seem to enter a competitive death spiral, where everyone is desperately trying to dig themselves out of the hole as best they can by selling their product below cost. Also, the "hub-and-spoke" model, which makes it easy to get connecting flights, is much less profitable than the point-to-point model competitors use, cherry-picking only the most lucrative routes. And the airlines are hugely vulnerable to swings in the price of fuel.