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Well, actually Virgin Atlantic Chief Exec Steve Ridgway didn’t put it that bluntly, but he did say more U.S. carriers have to go out of business and the rest have to raise their prices — if the industry is to survive. According to a Reuters report, Ridgway referred to repeated bankruptcies among U.S. airlines and said, “We can’t just keep up this merry-go-round of propping them up.” There are people on this side of the Pond who would agree with you, Mr. Ridgway. Can’t decide? Read his comments in full.
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I’m sure Ridgeway would love to have a little less competition. Virgin American entered the market at the worst possible time and are finding themselves struggling along with all the others. He’s right about pricing because there is none. And he’s right about capacity being a problem. But he’s wrong that letting carriers go belly up and liquidate will solve the problem. Since de-regulation, 200 carriers have gone out of business and the number of seats has continued to grow. Right now there are 100 applications at the DOT to start new airlines. Under current public policy, capacity will always exceed demand and prices well perpetually stay depressed. We have thirty years of experience as proof.
Comment by Steve Filson — June 12, 2008 @ 11:45 am
Very interesting the Virgin Atlantic brings this up when the Virgin-branded Virgin America is driving down revenue in saturated markets.
Hey Rick, a little off-topic, but what do you think of Crandall’s comments yesterday about regulating a pricing floor in markets? Here’s the link: http://www.aviationweek.com/aw/generic/story.jsp?id=news/CRAN06118.xml&headline=Crandall%20Calls%20For%20Re-Regulation&channel=comm
Comment by Joe Rinaldi — June 12, 2008 @ 2:37 pm