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Author: capncrunch2008 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 374  
Subject: Nationalize Airlines? Date: 4/24/2008 3:43 PM
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In response to today's Motley Fool article:

http://www.fool.com/investing/general/2008/04/23/lets-nationalize-the-airlines.aspx

Like P. J. O'Rouke I tend to favor libertarian economic values. And so I already know the answer to Beyers' question, "Why don't we just agree to pay our fair share?" The consumer is never going to volunteer to "pay his fair share." But even if, in some utopian fantasy world, he would agree he need not be asked.

The airlines could compete if the industry was really deregulated. But is never has been. Do you remember when American and United were ordered to cut flights at ORD for congestion and then some of those abandoned slots were awarded by the government to the "new entrant" carriers? That is not deregulation. That is like ordering a manufacturer to cut production and then giving 10% of his factory floor to a When an airline wants to compete wingtip to wingtip with a "new entrant" or other carrier it must avoid "predatory pricing." To do otherwise is to risk punishment by the government that "deregulated" the industry.

In a truly deregulated environment a carrier would be able to price tickets as low as it wanted, fly opposite any competitor ... and see who lasts. It would not take long for Delta or United to crush the likes of AirTran or JetBlue. If those "new entrant" carriers could think of a novel way to compete, come up with something new or unique, then they could fly and thrive. Innovation, not government protection, is the hallmark of unfettered competition. (To "juggle the rules" to protect the new guy reminds me of the nightmare economic world of Ayn Rand's Atlas Shrugged. Rand is the patron saint of libertarian thought.)

So, we either nationalize the airlines (or regulate the industry so that "franchises" are protected) or let the airlines truly compete. Let Darwinism prevail and only the strongest will survive. We cannot continue to operate on the middle ground, the "muddle ground." That ground is quicksand and the airlines are soon to be sucked under. The current policy, where the only concern is maintaining low prices, is one that is destroying the industry.

Even if we started today, it may be too late to allow true competition to work. We may have to re-regulate, even nationalize, the non-profit organizations which are the U.S. airlines. Then we can start over.
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