It has been fascinating to watch the airline industry (particularly in the United States) evolve in the past several years, since the start of the pandemic.
In some ways, the industry came back stronger and faster than expected, which is great. However, I also think the industry has fundamentally shifted, and the only solution may be consolidation (and I’m not meaning to sound like some self-serving airline industry executive, I swear!).
In this post I want to talk about that a bit, including what it could look like, given that I imagine the Trump administration may be friendlier to consolidation than the Biden administration was.
In this post:
The airline industry is really, really tough
Consumers (including me!) can be tough on airlines, though I think it’s important to acknowledge that the airline industry is an incredibly challenging business, even during good times. It’s one of the most cyclical, capital intensive, low margin businesses out there.
Those who choose to work in the airline industry largely do so out of passion, while those who invest in the airline industry on a long term basis might struggle with math, or maybe just aren’t aware that other industries exist. 😉 Industries don’t get more challenging than this.
People love to claim that airlines are greedy and are these wildly profitable companies earning billions of dollars, but the reality is that this is really consolidated across a couple of airlines, and that’s only during the best of times, while when anything goes wrong, the airlines lose billions.
For that matter, even during the best of times, airlines don’t actually make much money flying passengers. For example, Delta and United both had record years in 2024, yet their cost per air seat mile exceeded their passenger revenue per air seat mile. In other words, airlines made money on their loyalty programs, and from a few other sources (like cargo).
When the topic of industry consolidation comes up, obviously consumers are vehemently opposed to that. I get it. I mean, what consumer would want less choice and less competition? For example, look at JetBlue’s takeover attempt of Spirit, which was blocked by the Department of Justice.
The reason the merger was ultimately blocked is because it was decided that it would be better for consumers if Spirit remained independent as an ultra low cost carrier. The only problem was that Spirit hadn’t made money in years, and had no viable path to profitability.
Now we’ve seen the airline file for Chapter 11 bankruptcy protection, all while completely changing its business model, and retiring planes. Spirit is no longer an ultra low cost carrier, and is reducing industry capacity. That doesn’t seem great for preserving competition, eh?
Ultimately Spirit’s cheap ticket prices over the past several years were financed by investors, and that’s just not sustainable.
To give a totally different example, take a look at the current situation at JetBlue. It’s an airline that has long tried to offer customers more, from extra legroom, to free Wi-Fi, to seat back entertainment, to drinks and snacks. Yet the airline has also struggled with profitability, because consumers aren’t willing to pay a premium for an all-around better experience.
So now in a bid to return to profitability, JetBlue is trying to cut costs and increase revenue. I can’t blame the airline, but best case scenario, JetBlue could be mildly profitable, despite having a strong position in some of the country’s most lucrative markets (New York and Boston).
Why there’s a profitability “divide” in the industry
Why have a vast majority of the profits in the US airline industry been consolidated at Delta and United, while other carriers struggle with profitability? There are a few factors at play here.
For one, we’ve seen labor costs increase massively in the airline industry since the start of the pandemic. It’s one of the few industries where wage increases have exceeded inflation, at least among some work groups.
I’m really happy for the employees who received pay increases, but there’s no denying that this makes the cost structure of the industry much higher, and it also makes it more difficult to offer low fares. The reality is that demand for air travel is elastic, and if airlines could just raise fares, they would.
These higher labor costs also make it really hard for ultra low cost carriers to compete. Their business models are dependent on consistently growing and having a majority of employees on the lower end of the pay scale, but that just hasn’t been possible with the current state of the industry.
Next, the reality is that much of the profitability at the most profitable airlines comes from loyalty programs, and lucrative co-brand credit card agreements. I’m not suggesting all their profits come from these programs, but the finances at Delta and United would look materially different if it weren’t for SkyMiles and MileagePlus, respectively.
Smaller airlines simply can’t leverage these programs in the same way, since it’s hard to build that level of wallet share when you’re a smaller, regional airline. For that matter, many people collect points with the dream of jetting off somewhere exotic in a premium cabin, and that’s something many smaller airlines can’t offer.
Lastly, at the end of the day, the “big three” US carriers have gotten better at competing domestically, largely offering fares that compete with the value proposition of the lower cost carriers. Aside from loyalty programs, much of their profits come from strong premium demand, including on long haul flights.
They’re able to sell a lot of economy tickets at a loss, simply to fill seats, because it’s better than keeping a seat empty, and also to increase engagement in the loyalty program. That makes it harder for smaller airlines to compete, where they need to make money on each seat they sell, since those domestic economy seats are the core of their business.
People often wonder how ultra low cost carriers are able to succeed in Europe, while it’s a different story in the United States. There are so many factors at play — much lower labor costs, shorter average flight lengths, a more level playing field (since airlines don’t make as much money from their loyalty programs), network carriers with just a single hub (making it more lucrative to serve point-to-point markets), etc.
Is there a solution other than consolidation?
While shareholders subsidizing airline ticket costs is great in the short term, it’s not a long term solution. So, what should be done to address the fact that so many airlines are struggling with profitability?
I think there would be a strong argument against consolidation if we were to go back 15+ years, and undo some of the mergers we saw over time. However, with Delta and United having emerged as the two dominant carriers, it seems hard for any other carrier to come in and stop them. Yes, American could become more competitive, but that’s about it.
The reality is that costs likely aren’t going down. Short of a bankruptcy filing, airlines aren’t realistically going to be able to renegotiate their labor contracts. We’re seeing some airlines try to shrink into profitability, by deferring new aircraft. That’s also not great for consumers in the long run, since less capacity could lead to higher fares. Furthermore, if there’s no growth, then labor costs at airlines continue to go up.
However, it seems to me like consolidation in general is the only practical solution for the profitability problem in the industry. There’s power in scale, from loyalty programs, to route networks, to synergies from reduced costs.
To be clear, this doesn’t have to mean that American, Delta, and United, should just gobble up every airline. However, I do believe that some additional consolidation would ultimately benefit the industry, including potentially creating larger national competitors to American, Delta, and United.
This is what JetBlue tried to do by buying Sprit, but that didn’t work out (and the economics of that deal were questionable to begin with, but that’s a completely different story).
Now, some might be saying “there’s no situation where consolidation is good for consumers.” Well, look at Alaska’s recent acquisition of Hawaiian. Hawaiian was losing money for years, and its prospects were grim. Meanwhile Alaska is in a position where it can better leverage Hawaiian’s assets, and Alaska even plans to launch long haul flights. I’d say this is an example of how a merger can be good all-around.
I swear I’m not trying to be some industry apologist here, but does anyone have a better solution? For example, I think JetBlue is ripe for consolidation, or at a minimum, needs to restart some sort of partnership with American.
Bottom line
The airline industry is a tough business, even during the best of times. Here in the United States, we’ve seen airlines report some record revenue in the past couple of years, but also record costs. While Delta and United are soaring, other carriers are struggling to compete, as they have fewer revenue opportunities than the major global players.
With several airlines continuing to struggle with profitability, I can’t help but feel like some more consolidation is inevitable… and it might not even be bad for consumers!
What’s your take on airline industry consolidation? Do you think we’ll see more?
Southwest please join with JetBlue! Both airlines have relatively little overlap and the route networks would be complimentary.
Some of these US airlines need dance partners..no doubt about it. However, with the current administration, I doubt Washington will allow to many foreign agents to buy in the US airlines.
Based on above:
- Either Spirit mergers with Frontier, or it goes Chapter 7 (liquidation) and its assets (pilots & NEOs) are scattered to the wind
- B6 would be best candidate for foreign investment based on its Euro footprint. However,...
Some of these US airlines need dance partners..no doubt about it. However, with the current administration, I doubt Washington will allow to many foreign agents to buy in the US airlines.
Based on above:
- Either Spirit mergers with Frontier, or it goes Chapter 7 (liquidation) and its assets (pilots & NEOs) are scattered to the wind
- B6 would be best candidate for foreign investment based on its Euro footprint. However, all the big Euro airlines have existing partnerships with the Big Three. Once T5 is completed at JFK, B6 could pick up some interline domestic volume, but would not fill in all the seats. AS/HA would be the only merger approved by Washington. If not, B6 has a long, tough road ahead.
- Even if Breeze is making money, it keeps bouncing off the walls with its inconsistent frequency and dreadful customer support. Only assets here are pilots and airframes (A220).
- Allegiant is happy by itself....as in "Bugger Off"!! SunCountry has it own niche with the Amazon contract which smooths out seasonal revenue.
- Southwest is in a pickle. Too large to fail. Yet, the Administration would not allow it to merger with the Big Three. The new seating arrangements could bring in needed premium revenue. Hawaii service needs a hard scrub, especially inter-island service.
- The Big Three are in a similar situation as WN as in too big to fail. Washington would not allow them to merger. Relying too much on credit card revenues is a bit precarious. Need to sort out their PAX issues for long term survival.
Be careful what you wish for, you may end up with a monopoly and all the awfulness that involves. I often think about why Japanese airlines like ANA and Japan Airlines are so good, and that's because they have a formidable competitor in each other that has driven quality very high, in a culture where service and hospitality is already a high standard. Then you look to the UK, and we've never really had formidable...
Be careful what you wish for, you may end up with a monopoly and all the awfulness that involves. I often think about why Japanese airlines like ANA and Japan Airlines are so good, and that's because they have a formidable competitor in each other that has driven quality very high, in a culture where service and hospitality is already a high standard. Then you look to the UK, and we've never really had formidable competitor in terms of a full service airline to BA - the closest was BMI, but even they were not at the scale of BA and Virgin although likes to see itself as a competitor is too small to be really counted as one. Even BMI disappearing, has had horrible effects on loyalty, no doubt the recent changes to BA Executive Club were put through with the confidence they don't have any domestic competitor. When BMI was around they had a very attractive loyalty scheme that did keep BA on its toes. In our economic systems, industries often end up as monopolies, which is ultimately terrible, so competition is good.
AA needs to be allowed to buy JetBlue, and then get a new board & CEO. Period.
They gain back in NYC, get some interesting planes, and are stronger in the NE/Florida.
The way that AA has shrank will not allow it to catch up to United/Delta organically.
A lot of people are arguing that mergers would allow for new competitors in "fortress hubs." I am not sure I buy that
- Southwest acquired AirTran, a company that was holding its own in ATL even with Delta's hub there. Southwest over the years then dismantled its presence in ATL and has basically given up there. Frontier and Spirit are trying to fill in, but clearly the merger was a net negative for ATL...
A lot of people are arguing that mergers would allow for new competitors in "fortress hubs." I am not sure I buy that
- Southwest acquired AirTran, a company that was holding its own in ATL even with Delta's hub there. Southwest over the years then dismantled its presence in ATL and has basically given up there. Frontier and Spirit are trying to fill in, but clearly the merger was a net negative for ATL competition
- Alaska bought Virgin America, an airline that was holding its own at several west coast airports, including SFO. Alaska initially talked about being strong up and down the west coast. Yet they too basically abandoned their plans to compete, leaving the competitive situation worse off at SFO (LAX has retained a pretty good competitive balance).
Again, those hoping for consolidation need to explain what the goal is. Ticket prices, in general, have seen less inflation than other categories of services and goods in recent years. People talk about a need for more "competition" in NYC - honestly fares in NYC have been pretty stable for years.
I think this makes sense. NYC has competition because JetBlue did come in 20 years ago as a disrupter, and both post-merger Delta and post-merger United have obtained/built-up hubs that actively compete with JetBlue and each other. But that is a relatively unusual case.
Possibly some commentators hoping for more consolidation are looking too much at the NYC example. Or maybe when Southwest first came into Chicago and Baltimore. I'm not sure if there is...
I think this makes sense. NYC has competition because JetBlue did come in 20 years ago as a disrupter, and both post-merger Delta and post-merger United have obtained/built-up hubs that actively compete with JetBlue and each other. But that is a relatively unusual case.
Possibly some commentators hoping for more consolidation are looking too much at the NYC example. Or maybe when Southwest first came into Chicago and Baltimore. I'm not sure if there is any fertile ground for this to be repeated elsewhere in the country.
How that AA and AS have both reported, the picture for the 4 US legacies is clear.
DL is leading the industry in revenue production and profits and has all of the costs associated w/ the industry, UA is doing very well at closing the revenue production gap but still w/ a lot of costs to take on, and AS is getting part of the revenue from the HA merger and has more costs to...
How that AA and AS have both reported, the picture for the 4 US legacies is clear.
DL is leading the industry in revenue production and profits and has all of the costs associated w/ the industry, UA is doing very well at closing the revenue production gap but still w/ a lot of costs to take on, and AS is getting part of the revenue from the HA merger and has more costs to take on.
AA is the industry laggard and is far more of an influential in industry results than the low cost and ultra low cost carriers (other than WN) because of its size.
AA competes in the same international markets as DL and UA but clearly struggles to generate profits outside of peak periods of the year.
Industry consolidation will come from the strong taking share from the weaker, not from the big 4 gaining assets.
Big 4 carriers that have access to all major markets are far better positioned to gain than those such as UA which do not serve JFK and are weak in Florida while DL has all of the components of a strong domestic and global network, all of which can grow organically.
Cities like FLL will see much more capacity churn as carriers try to make it work.
The dreams of acquisition of B6 or NK's assets or networks by the big 4 just won't happen.
One big difference between Europe and the US is simply population density, with Europe bring roughly 6x. That makes a huge difference in the economics of both rail and flight infrastructure.
Biggest factor here is fortress hubs monopsony power, which Delta's leadership had been remarkably prescient in solidifying, only to be now regrettably squandered under current management. Still, though, the remnants of good judgment past continue to pay dividends notwithstanding the clownish leadership -- with the dearth of antitrust enforcement even facilitating rapid credit product growth in captured markets!
Did I miss something? Did delta’s core/monopoly hubs get squandered in recent memory?
I guess I haven’t looked at market share data, but I don’t recall any slippage at the delta monopoly hubs?
One of the factors you left out of your analysis is that airlines are not only capital intensive. They're also labor intensive. That combination is tough. The other factor in this situation is that the airline industry is mature. It's no longer a growth industry. and LCC/ULCC carriers are predicated on growth that simply isn't there in a mature industry. That's why you often see carriers refer to capacity and revenue growth as a percentage...
One of the factors you left out of your analysis is that airlines are not only capital intensive. They're also labor intensive. That combination is tough. The other factor in this situation is that the airline industry is mature. It's no longer a growth industry. and LCC/ULCC carriers are predicated on growth that simply isn't there in a mature industry. That's why you often see carriers refer to capacity and revenue growth as a percentage of GDP growth. Delta and United, in particular, are disproportionately benefiting from the growth of international traffic and the increased demand for upscale products (which Delta has and United is touting). But consumer habits can change very quickly. Can the legacy carriers with their high capital costs and large fleets adjust if that happens? Stay tuned ...
All of the above is to say that more consolidation is probably likely. And it's probably necessary. The question comes down to a choice between a lot of "weak sisters" trying to compete with behemoths, or fewer but somewhat larger airlines providing competition. I'm thinking that large carriers buying out smaller ones (example: JetBlue and American consolidating) will probably include large divestitures of assets. In the American/JetBlue scenario, the only place American truly needs to...
All of the above is to say that more consolidation is probably likely. And it's probably necessary. The question comes down to a choice between a lot of "weak sisters" trying to compete with behemoths, or fewer but somewhat larger airlines providing competition. I'm thinking that large carriers buying out smaller ones (example: JetBlue and American consolidating) will probably include large divestitures of assets. In the American/JetBlue scenario, the only place American truly needs to grow to compete is in New York. The rest of Jet Blue could be spun off to Breeze (that last part was intended to include a bit of irony that probably won't happen).
accurate, and it just means that the strongest have figured out how to feed off of the weakest.
You don't need consolidation to do that.
I was simply citing an example. If there is consolidation it will probably come from the combination of smaller carriers. But you're possibly right that "consolidation" may come as the result of one or two airlines going out of business.
Has anyone tried to consolidate the big 3's loyalty program and flying operations into one revenue /earnings per seat mile and compared it to airlines that don't have such loyalty program so we can check how profitable the businesses are really ?
I think Southwest is the lynchpin for future consolidation. Lots of airplanes, big domestic operation but not much of an international presence. A merger with a low cost domestic carrier doesn’t make a lot of sense. Could SWA merge with one of the big three? Probably not, but it is interesting that they are reducing their presence in ATL while they and Delta are increasing their presence in Austin, as if to establish a hub...
I think Southwest is the lynchpin for future consolidation. Lots of airplanes, big domestic operation but not much of an international presence. A merger with a low cost domestic carrier doesn’t make a lot of sense. Could SWA merge with one of the big three? Probably not, but it is interesting that they are reducing their presence in ATL while they and Delta are increasing their presence in Austin, as if to establish a hub in Central Texas that could challenge IAH and DFW. It’s also probably a coincidence that the CEO of Delta is singing the praises of the new administration and just contributed a million dollars to Trump’s inauguration committee. Delta merging with Southwest will probably never happen but Southwest has to do something.
The reason you are trying to get at for why consolidation is needed is because the big three (yes, the big three) have become too powerful because they have been allowed to merge and gobble up their competition in the last two decades. Mega legacy airlines in Europe only ever have one true hub (or in the rare case of Lufthansa, two). But look at UA, DL and AA, who swallowed up US Airways, Northwest,...
The reason you are trying to get at for why consolidation is needed is because the big three (yes, the big three) have become too powerful because they have been allowed to merge and gobble up their competition in the last two decades. Mega legacy airlines in Europe only ever have one true hub (or in the rare case of Lufthansa, two). But look at UA, DL and AA, who swallowed up US Airways, Northwest, Continental, and all the other older carriers. UA has hubs in SFO, (LAX), IAH, ORD, EWR, IAD and DEN. Delta the same with SEA, MSP, DTW, JFK and ATL. There is just no way an up-and-coming carrier can compete with their market dominance. So the solution is to start breaking up the monopolies of the larger airlines. You may argue that the market splitting led to the failure of all those airlines in the 90s and 2000s, but there are many other reasons they failed (stock market crashes and 9/11). Fundamentally, the airline industry is not what it should be in the US. Firstly, all short-haul flying should have been replaced by high speed rail years ago, as has been done everywhere else in the world (China, Spain, France, etc.). Then, the monopolies should be broken, subsidies should support essential service and bring prices to more of an equilibrium, airport services should be common and shared across all carriers (instead of airlines investing in exclusive services and branding at their hubs which costs lots of money), and eventually air service can be folded in to public transport in some way that makes it less inefficient and better for passengers and the state. All profits reinvested back into the system instead of splitting dividends and then speculating when you are hoping for loans, which only leads to uncertainty and has led to the failure of countless airlines. Basically, communism.
You realize LH group has, at least, 6 hubs? Just because it’s called Austrian or Swiss doesn’t mean LH doesn’t completely own them.
Fra, muc, zrh, bru, GVA, and VIE with fco/mxp incoming at some point
Iag has 4
Lhr, dub, mad, and bcn
AF/KL only has two since they don’t own all of SAS but cph could be added in the near term
Airlines are NOT a low margin business contrary to the claim in the article. That is trying to worship them. What they are is that they have high fixed costs.
Oh no no no, no one needs more consolidation. US carriers already act like monopolists within each of their hubs and regions, and as a result US travelers get mediocre airline service for mind boggling premium prices.
What the US needs is a real copy of Ryanair. A real low cost airline, incomparable to the fake low cost flying rubbish in the US. Ryanair has clean planes. Clear rules. You pay only what you...
Oh no no no, no one needs more consolidation. US carriers already act like monopolists within each of their hubs and regions, and as a result US travelers get mediocre airline service for mind boggling premium prices.
What the US needs is a real copy of Ryanair. A real low cost airline, incomparable to the fake low cost flying rubbish in the US. Ryanair has clean planes. Clear rules. You pay only what you need. Good food and drinks. Polite cabin staff. Ultra low prices.
You were just explained to why that wouldn't work in the US. Did you even read what was written?
The explanations that you refer to are other valid opinions, but opinions are not the same as explanations.
Also, it doesn’t hurt to be nice and constructive in your comments. Do you think anyone who reads the snarky and condescending tone of your comment will have a favorable impression of you, and of your comments?
As long as no one joins skyteam it’s ok by me
Consolidation should continue to the point where the US has one national ULCC, Frontier, and five national carriers: United, American, Southwest, Alaska, and the airline that shall not be named. All others need to die tomorrow, especially B6 and MX.
What’s your issue with MX?
Like its sibling in evil, B6, it is the product of Neelzebub and is designed to appeal to the disgusting inhabitants of the City So Vile They Named It Twice.
I was pleased to see that the merger of AS and HA was approved and is going forward. Both of these carriers are going to be able to provide consumers not only on the US West Coast but also really the rest of the country quality airline choices, I think both in price and comparable service quality.
I would be interested in seeing a Spirit / Frontier merger, because if Greyhound could acquire Trailways...makes sense.
“Needed” by whom? Consumers right now get pretty good fares, inflation adjusted. Airline employees are making money. Shareholders? They can all sell and invest in something else, and most have outside of a few airlines. Not many people are clamoring for airline consolidation besides a few executives and a few AAdvandage enthusiast bloggers.
Maybe the status quo isn’t that sustainable - but the growth of airlines like Breeze, Avelo and others, plus the fact...
“Needed” by whom? Consumers right now get pretty good fares, inflation adjusted. Airline employees are making money. Shareholders? They can all sell and invest in something else, and most have outside of a few airlines. Not many people are clamoring for airline consolidation besides a few executives and a few AAdvandage enthusiast bloggers.
Maybe the status quo isn’t that sustainable - but the growth of airlines like Breeze, Avelo and others, plus the fact Frontier is fighting back aggressively, seems to indicate maybe things aren’t that dire
Agreed, "needed" to accomplish what exactly? If it's not resulting in lower consumer fares, better customer service/engagement & a significantly better product for the majority of flyers, then no.
True high speed rail would be the best solution. Fares are lower in other parts of the world because of alternatives to air travel, not additional competition within the air travel segment. Now i know that isn't going to happen for a myriad of reasons (largely geographic), so I would then agree, creating a 'Big 4' or 'Big 5' is likely the best solution. Just adding more small players won't have that big of an...
True high speed rail would be the best solution. Fares are lower in other parts of the world because of alternatives to air travel, not additional competition within the air travel segment. Now i know that isn't going to happen for a myriad of reasons (largely geographic), so I would then agree, creating a 'Big 4' or 'Big 5' is likely the best solution. Just adding more small players won't have that big of an effect except in isolated markets. So i'm pro consolidation as long as it doesn't involve the Big 3.
High speed rail is too slow for America. Regional high speed rail is a possibility but not LAX-JFK or even DEN-PIT.
Here's the issue. Too many fares do not make money. That's why the major airlines have moved to more profitable ways of making money. Smaller carriers can't command large alternative sources of revenue and they wither on the vine trying to make money from fares and fees.
To all the people who claim we need "competition" what they mean are lower fares. Yet they never seem to have an answer on how said airlines will...
Here's the issue. Too many fares do not make money. That's why the major airlines have moved to more profitable ways of making money. Smaller carriers can't command large alternative sources of revenue and they wither on the vine trying to make money from fares and fees.
To all the people who claim we need "competition" what they mean are lower fares. Yet they never seem to have an answer on how said airlines will ever make money other than getting more planes, more people and more routes and that somehow flying enough money losing planes and routes will turn a profit.
Unfortunately, there is no longer a CAB and turning this over to government control would only make matters worse.
This means even more concentration into a few hands as smaller carriers have no choice but to be absorbed by larger carriers.
It's not really logical to say "airlines don't make money on flying passengers" just because their total cost of operating their network exceeds the total passenger fares that they receive. Sure, they couldn't turn a profit without also selling miles and hauling cargo. But they couldn't do these other things if they weren't flying planes full of people around. The two aren't separable.
Why is a solution for (universal) profitability needed?
What makes you think every company in a market should be profitable?
I'd rather not they consolidate but I'm not aware of any region/market that has as much diversity and choice in airlines as the US does
china....
A big part of the problem is that there's been too much consolidation among the majors. The last round of American-USair, Delta-Northwest, and Continental-United should never have been allowed but because those mergers were permitted the smaller players just don't have the scale to compete with the behemoth Big 3.
Ironically that may actually require a small amount of further consolidation such as Alaska-JetBlue, Southwest- Spirit, etc. to make the smaller airlines viable competitors. One...
A big part of the problem is that there's been too much consolidation among the majors. The last round of American-USair, Delta-Northwest, and Continental-United should never have been allowed but because those mergers were permitted the smaller players just don't have the scale to compete with the behemoth Big 3.
Ironically that may actually require a small amount of further consolidation such as Alaska-JetBlue, Southwest- Spirit, etc. to make the smaller airlines viable competitors. One thing needs to happen first: landing slots need to be changed from being a permanent possession to being leased in rotation for 10 years. That will allow non-legacy airlines to compete with established players.
So, Alaska buys Jet Blue?
Alaska, Delta and United stocks all outperformed market and disease in 2024. As they say, you have to know when to hold them and when to fold them.
The problem is the low cost and ultra low cost carrier airlines do not have the revenue or the products which the market wants right now. Credit card programs are certainly part of it.
International has rarely been as profitable as it is for US airlines right...
Alaska, Delta and United stocks all outperformed market and disease in 2024. As they say, you have to know when to hold them and when to fold them.
The problem is the low cost and ultra low cost carrier airlines do not have the revenue or the products which the market wants right now. Credit card programs are certainly part of it.
International has rarely been as profitable as it is for US airlines right now. United was well positioned to capture that growth but if a segment does well other competitors will enter and that is why Delta particularly is much better positioned to grow internationally than United is.
And remember that it was Delta that started the huge increase in labor costs for post Covid. It knew what it was doing and the impact it would have on other airlines.
When you mention international and United in your 3rd paragraph why does that have anything to do with delta?
This comment is riddled with inaccuracies and baseless assumptions. Dismissing low-cost carriers shows a complete misunderstanding of their profitable niche in domestic and leisure markets. Claiming Delta is ‘much better positioned’ internationally than United is absurd—United boasts the largest trans-Pacific and trans-Atlantic networks among U.S. carriers and has been aggressively expanding. Delta’s partnerships are strong, but they don’t make it the dominant international player.
The suggestion that Delta raised labor costs to harm competitors is...
This comment is riddled with inaccuracies and baseless assumptions. Dismissing low-cost carriers shows a complete misunderstanding of their profitable niche in domestic and leisure markets. Claiming Delta is ‘much better positioned’ internationally than United is absurd—United boasts the largest trans-Pacific and trans-Atlantic networks among U.S. carriers and has been aggressively expanding. Delta’s partnerships are strong, but they don’t make it the dominant international player.
The suggestion that Delta raised labor costs to harm competitors is pure speculation. Those increases were a response to industry-wide labor shortages, not some grand strategy. If you’re going to make bold claims, at least back them up with real data. This reads more like wishful thinking than a serious analysis.
Ah yes, I can’t wait for every remaining major city to get monopolized by a hub carrier.
No.
What's needed is more competition.