Let Fly Real Competition

by Don Boudreaux on February 9, 2008

in Antitrust, Regulation

My friend (and co-blogger at Market Correction) Andy Morriss sent this superb letter yesterday to the Financial Times:

Sirs, 

Something very large is missing from your story on the
possible Delta-Northwest and United-Continental airline mergers (“Delta
and Northwest near deal,” Feb. 7): any mention of non-US carriers.  Because
the United States does not allow foreign carriers to own U.S. airlines, well-run
airlines like Air France-KLM, British Airways, Singapore Airlines, Virgin, or Emirates,
the most logical merger partners for the money-losing U.S. legacy carriers, are
prohibited from joining the game.  What the U.S. aviation industry
desperately needs is a dose of competition from competently run airlines, not
another round of “consolidation” of poorly managed ones. Merging
four failures into two solves nothing; what’s needed is competent
management that can figure out how to make money in one of the world’s
biggest markets for air travel.

Andrew P. Morriss
H. Ross & Helen Workman Professor of Law and Business
University of Illinois

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{ 3 comments }

Mathieu Bédard February 9, 2008 at 6:24 pm

Very well written indeed!

eric February 9, 2008 at 7:27 pm

Local Minneapolis politicians have encourage patronage politics, and ultimately short-sighted competition, by ensuring that Minneapolis, the NW local, hometown hub, does not have competition from upstarts like SunCountry. Prices from Minne are higher than average, and local politicians discourage competition, justified by their ability to save jobs. So consumers be damned, they are saving jobs! See new Democratic Senator Klobuchar's recent letter to NW about her 'concerns' about a potential merger. No concerns about consumers, just highly visible, concentrated, jobs. It's really pathetic.

FreedomLover February 11, 2008 at 1:47 pm

eric:

It's not pathetic to that constituency. The real question that has to be asked, is why is everyone else tolerating this stuff? Personally, I think it's apathy in general. People are completely apathetic about everything these days, except for a select few researchers, inventors, entrepreneurs and artists. The remaining 99.9999% of the population are barely better then grazing cows.

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