US Air filed for bankruptcy. They're trying to get a 900 million dollar loan guarantee from the American people. They have also asked their employees to give up 900 million in annual pay, benefits and job cuts.

So now, United is looking at doing the same. They lost 2.1 billion in 2001. They lost 851 million in the first six months of 2002, and they are currently losing a million dollars a day. It doesn't look good for them.

Now, I don't claim to be an economics whiz, but isn't this just the result of the law of supply and demand?

Less people want to fly, and the amount of available flights stays the same. So they drop price. Dropping price drops revenue. Less revenue means less profit. Right?

So really, what's the big deal? A couple of airlines might go out of business, and some jobs will certainly be lost. Old planes will be scrapped, and newer planes will be sold off to other companies, who take up the slack.

But when confidence is back up, we're going to want to fly again. And pilots will be hired, and planes will be bought. The airlines that made it through the downturn will grow strong, and we, the consumers, will benefit in return.

Any thoughts?

Mike

Generally I have to agree with you here. This is one of the cases where I think the market should be left to itself. Its not like there are a shortage of airlines.

Before September 11th 2001 all these airlines were on the verge of bankruptcy, not because of supply and demand problems but form *** NOTICE: THIS WORD IS AGAINST THE RULES. FAILURE TO REMOVE IT WILL RESULT IN A STRIKE. *** poor management problems. That and the government regulated it to death through labor agreements, price caps, and regulations. So to bail them out now would be helping a company that cannot manage itself. If the die they will bring the economy down a little too, the stock market wont be effected I think because their stock has already tanked.

Free market means just that free, but the airlines are far from free. If we just let them have a little control who knows maybe they would even improve security.

Maybe we should just give the airlines the same setup as Amtrak.

[sarcasm] That's worked out well. [/sarcasm]

Mike