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Originally Posted by damien b
The TAA/Ansett duoploy is a good case. Its how they make good money and keep shareholders happy - not the flying public.
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I can't remember, when were the domestic airways deregulated? I'm sure fares and timetables were set by a government department rather than the companies up until the late 80's.
In any case, companies will charge what the consumer can bear. That's why Mars bars made in Ballarat and BBQ shapes made in Blacktown are cheaper in Singapore than in Australia - we as a nation have a higher disposable income, so can afford to pay more without diminishing the market demand. Most of my flights between LAX and SYD have been close if not at capacity, obviously they could fill demand at the higher prices. Now that supply has increased, the consumers are saying we will no longer fly at those prices, so they come down.
Yes, shareholders are happier at higher profit levels. But remember, without shareholder funds, then capital investment will be made from more expensive bank loans. Therefore all fares would increase to fund that increased cost of capital. Shareholders aren't bogeymen, they assist economic development. They also deserve a decent return for the increased risk of putting their money into companies rather than into the bank.
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The only people who seem to make a reasonable return out of aviation are the airport owners who have everyone by the short and curlies - airlines and pax alike.
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That's why I have shares in MAP rather than QAN. The returns are more stable, and the risk is shared across a broader spectrum. The planes have to land somewhere
