Despite the discounted price, the service was first class all the way: luxurious leather seats, a personal TV screen on the back of my seat, and friendly and professional attendants. Flying was actually a pleasurable experience for once.
Jet Blue's financial success flies in the face (pardon the pun) of the conventional wisdom these days that there is some law of economics that requires airlines to lose money. This is an industry in which three of the largest airlines, American, United and U.S. Airways, are all either in bankruptcy or teetering on the brink. (U.S. Air is expected to come out of bankruptcy any day now only so that it will qualify for federal funds.) The combined losses of just these three airlines in 2003 could reach $8 billion.
I flew Jet Blue last year and it was the best experience of my flying life.
The airlines already got their golden handshake last year when Congress authorized $5 billion in cash and $10 billion in loan guarantees.
Another bailout will have the perverse effect of rewarding the high cost airlines and punishing their lower cost, more efficient rivals. A bail-out will only delay precisely what this stodgy industry needs: a cathartic shake-out in which only the strong survive. That's the brutality, but the wealth creating magic formula of capitalism.
But doesn't the war give the airlines a special case for help? No, the industry's financial ailments are not predominantly a result of the war. U.S. Air and United were already on the verge of financial collapse even before 9/11. Union salaries in the big airlines were insanely unsustainable. It's no coincidence that American and United - the two airlines that have allowed the unions to negotiate the highest salaries and the highest benefits - are the two that are hanging on a thread from insolvency. The downfall of these two once proud and profitable airlines has been many years in the making.
His next point is the one I made in my blog entry about Reagan last Sunday.
So let the free market work. Congress doesn't rush to the aid of the corner grocer or the small businessman whose business model fails - even though they too probably have been temporarily adversely impacted by the war. There is certainly no national security rationale for a multi-billion dollar bailout. Even if United and American collapse, air service will continue unabated.
I've seen the future of this industry. It is Jet Blue and Southwest, Air Tran and other upstart companies that are low-cost, efficient, and customer-friendly. These are the new friendly skies, and they don't need a check from taxpayers to serve their investors or their frequent fliers.
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