Are Market Forces Working?
Its commonly believed that in the face of this turmoil, the government should do something. What? Should the government put a price cap on jet fuel, which would mean the government, and not the market, allocates fuel to airlines? Should the government reregulate fares so the least efficient carriers could survive? If reregulation raises fares, the least efficient carriers are hurt because they tend to cut fares to attract desperately needed traffic. If fares were lowered, inefficient carriers would still fail because their competitors would match their fares. Market forces, although painful, are working. A return to some form of regulation or government- arranged mergers is not needed. The industry will survive. Excess capacity will be eliminated, the surviving carriers will be more efficient for overcoming this series of events and be better prepared for competition in the international arena. What does this mean for consumers? Critics of the airline industry as it has evolved since d
