Mike Levine looks ahead and sees two airline worlds

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Michael E. Levine, a pioneer of airline deregulation, had a few very interesting obiter dicta in a talk he gave the other day to Washington‘s International Aviation Club. He suggested a segregation, a bifurcation as it were, of air travel between leisure travel and business-oriented travel may emerge from the US crisis – as is the case in Europe, with two networks coexisting. Levine asked more questions than he answered because (a) he knows he doesn’t have the answers, and (b) that‘s what economists do, anyway. You can read his speech by going to the Club’s website.

But here are some fascinating bits: Now, though, “as prices go up, price-sensitive travelers are leaving the system. Flights are consolidated into larger aircraft to get CASM down to where RASM has a prayer of covering it. As aircraft size rises and total passenger volume falls, the system shrinks. As the system shrinks, it become less attractive to convenience-oriented travelers and they resist paying more for less….Where will it end? …Will leisure transportation continue to be produced jointly with business transportation?”

 

 

 

 

 


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“The leisure and business ends of the market may separate, perhaps becoming something more like what exists in Europe and is emerging in Asia. In that world, we may see fewer hubs and more turboprops connecting to them but more jet service twice a week from Appleton, Wisconsin, to Orlando, tied to a hotel package and tickets to see the Mouse.”

After countering “rumblings in Congress for” some form of reregulation, a call recently made by former American Airlines chairman and chief executive Robert Crandall, Levine, now at NYU Law, outlined regulation in the days of the old Civil Aeronautics Board – for which he was a senior staffer. He concluded that “not only didn’t regulation create the modern industry, it couldn’t protect the industry that it did create from the outside world or itself.”

(Photo by David Shankbone, Wikimedia)

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One Response to Mike Levine looks ahead and sees two airline worlds

  1. Brittanie December 20, 2010 at 7:28 am #

    Going to repeat what everyone else has said, thanks and wonderful article.

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