--=======1183C5A======= Content-Type: text/plain; x-avg-checked=avg-ok-7CB07CC2; charset=us-ascii; format=flowed Content-Transfer-Encoding: 8bit I'm no economist. This may become obvious. However, it seems to me a little hard to consider air transport as a public utility. As an occasional visitor to the USA over many years, I do seem to detect a small change in people's attitudes to such few Public public enterprises as the TVA. It only takes a few Three Mile Islands to make people think that maybe there should be more oversight of the privately-owned facilities of this type. But the Survivalist attitude, the black-helicopter brigade, and the jokes about "We're the government, and we're here to HELP you" run counter to this. The California power crises of recent years seem to have derived from an open-slather approach to price-setting at the wholesale level. Do you seriously see this happening in the air travel market? You appear to be suggesting that all travel should be bought through a form of on-line auction, perhaps like Priceline, where you don't know much about your flight until you are locked in. Robin Johnson At 10:35 PM 3/11/2003 Tuesday -0500, Tim McDonough wrote: >It looks like the pumpkin hour for AMR and perhaps it's time to revive the >economic regulation debate. So I'd like to toss a few thawts into the >forum to see what everyone is thinking these days: > >Would the "deregulated" electric utility model work for the US airline >industry? That is, would it be possible to treat the existing carriers as >regulated utilities and push all the seats into a commodity market? > >It would be an extension of the code-sharing model except that the >regulated "operating" carriers would not be allowed to participate in the >market for the seats except as suppliers to the "marketing" companies who >would be challenged to wrap the commodity in value-added services. A true >commodity market could then develop that would include truly transparent >spot, forward and futures mechanisms that would allow efficient price >discovery. > >Of course the operating carriers would have to give up their right to >participate as market makers and would necessarily have to abandon their >massive 3rd degree price discrimination infrastructure (aka "revenue >management"), but then, those models are all disfunctional now anyway. The >operating carriers would have to be content then with a regulated, modest, >but steady, long-term return on their monumental capital investments. The >marketing companies, virtual airlines if you will, would assume the risks >of seat ownership in exchange for the opportunities to extract as much >consumer surplus as they can legally get their hands on. > >The implications of such a model are quite profound of course, but then so >is the prospect of chapter 11 for the top 5 carriers in the industry. --=======1183C5A======= Content-Type: text/plain; charset=us-ascii; x-avg=cert; x-avg-checked=avg-ok-7CB07CC2 Content-Disposition: inline --- Outgoing mail is certified Virus Free. Checked by AVG anti-virus system (http://www.grisoft.com). Version: 6.0.459 / Virus Database: 258 - Release Date: 2/25/2003 --=======1183C5A=======--