Big Airlines in a Rush to Go Small
By MICHELINE MAYNARD
Published: June 6, 2008
With fuel prices almost double what they were a year ago, airlines have switched strategies from expansion to downsizing.
http://www.nytimes.com/2008/06/06/business/06travel.html?ex=1370491200&en=48612e3d7bb4453d&ei=5124&partner=permalink&exprod=permalink
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I recently ran across a graduation speech by the tennis great Roger
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In the 1,526 singles matches I played...
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5 comments:
Anyone know why more airports are created? In theory, couldn't this help increase the supply of avaliable routes and take off some cost charged to airlines at the airports.
Anyone?
Did you mean why more airports aren't created? I think this is a coordination issue - much the same as Aurelia's presentation on the ports in India - who's going to pay for the airports? If it's the government, where is the money coming from? Theoretically if more airports were built, there would be more competition and thusly lower prices, but I'm thinking the cost of building an airport, getting it connected to the right routes, convincing an entire airline to shift operations, and coordinating with the FAA and other government boards to get the new airport legitimized is probably prohibitive to a normal profit-seeking private enterprise.
There would probably have to be a public-private partnership on this one, and I'm not sure who on the private side would randomly decide to make the investment, especially since the government hasn't made a huge effort to promote this option.
Aside from the coordination issues at hand, I think the real root of this problem is that the cost savings to any individual airline are not enough to justify building more airports on a massive scale. Fuel prices are so high (yawn) that at this point the cost savings of flying more, shorter routes to more airports, would have to be really high to get over the decreased overall demand for flights. The reason airports developed as they did was as a result of localized demand points that reached critical mass. More airports could be created, but I think the chances of hitting critical mass are probably low for each individual airport, especially with increasing fuel prices, which drag down efficiency.
Airlines would have to redesign their entire logistics systems (another cost against extra airports), and then they'd have to figure out how to convince travelers to fly to Beaumont when they want to reach downtown Houston.
So I guess my response would be:
1. Coordination issue first: no one has taken the first step.
2. Cost issue second: even if there were new airports, airports were designed at a critical mass of demand, which are localized around particular points; it would be difficult to re-educate consumers to take an airplane to a city that isn't in their original travel plans.
In terms of more airports around the same cities, you're looking at a space issue in the major ones (i.e. Heathrow, NYC, etc.), and a lack of demand in the smaller ones.
My vote? Government gets to work on teleportation. No airport issues AND it's good for the environment.
good thoughts, I like it
I'm confused. Why do we need more airports? For customer convenience? It would be convenient for me to have a private helicopter fly me to work every day. Sadly, the market doesn't seem willing to provide that.
If it's not cost effective, the market won't provide it (neither should the gov't) and airlines are in a great position to determine what is cost effective.
Oh, and about re-educating consumers on where to fly. Isn't that what marketing is for. There wasn't a problem "re-educating" consumers about the availability of the i-Phone.
From what I understand, airlines want more airports or at least more terminal space. However, because there are government regulations involved in airport construction and size (noise restrictions and land regulation about where they can be built or how big) the supply of avaliable terminals has stagnated while the demand for more flights has gone up. Hence the disconnect between demand and supply.
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