Delta Airlines recently acquired a 49% stake in Virgin Airlines which now allows Delta to delete & merge flights from NY to London. The deal in the merger was that Delta and Virgin Airlines would share costs and revenues on transatlantic routes. This works out well for both companies because the companies can legally share pricing strategies and slowly hike the fares up. Even though they are two entirely different companies, they are essentially the same company when it comes to pricing.
The US airline industry is an Oligopoly because there are only 6 major airlines in the US. (US Air, American, South West, Delta, Jet Blue and United. It is also extremely costly to enter and exit the industry. To add to the Oligopoly, most airports only service a couple of these airlines (Memphis). This creates a service and price monopoly on the airport location.
Essentially, the airline industry is a monopoly inside of an oligopoly. Unless you happen to live in Philadelphia, New York, Chicago, Atlanta, Dallas, Charlotte, LA, etc...
http://www.nbcnews.com/business/delta-air-lines-buys-49-stake-virgin-atlantic-1C7546210
http://www.bizjournals.com/memphis/blog/memphis-in-motion/2013/01/nate-silver-calls-out-memphis-airfares.html
I don't like to complain on FB, but here is a good one for all you travelers. Delta has now come out with an "E" class ticket (for Economy). This ticket is definitely "back of the bus" status. If you buy one of these gems, which I am forced to buy according to our corporate travel policy, it renders useless my frequent flyer status. So, my Diamond FF status and my 2 million miles on Delta are considered worthless by the airline.
ReplyDeleteI sent an email explaining that this new fare class made the FF program useless. Delta has turned every seat on the plane into a bidding contest regardless of loyalty programs. I pointed out that I fly Delta rather than other airlines exactly because I get seating preference (why else would I often pay more)? I can most often pay much less on other airlines and the same get poor seating choices. Guess that is my future. Delta has made airline loyalty a thing of the past.
BTW... this is what monopoly power does to consumers. Where is the US Justice Dept on airline monopolies? How are they protecting the consumer? This is another example of how our liberal, Eric Holder-led Justice Dept is really about propping up cronies and otherwise friends of the elected.
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