> That was surprising. Goes against the idea that deregulation allows companies to squeeze consumers and earn excess profits

Sometimes it does and sometimes it doesn't. It depends on the industry, as the article goes into detail to explain.

> was surprising. Goes against the idea that deregulation allows companies to squeeze consumers and earn excess profits.

That's because this assertion is economically illiterate. Deregulation can lead to increased profits where otherwise companies have monopoly power. But often, the regulation was there in the first place to ensure that companies had sufficient profit to invest in expensive infrastructure. (E.g. railroads).

A race to the bottom on pilot pay won't help anything. Well it may lead to less qualified pilots. You can ask Boeing how well screwing over labor has worked for them if you like.

All US airlines have the same labor costs for pilots and it isn't their highest cost anyway. That would be fuel.

If you want to divvy up costs that way: Boeing is probably the biggest problem. Both them and Airbus eat up all possible excess profit on the back end via the cost for airliners. Break up Boeing, bring back competition in airliner manufacturing. People who want to screw over labor don't usually frame things in those terms for some reason.

Could it be Hollywood accounting?

Airlines are popular employers specifically because they offer a clear vision of future pay increases and better, more prestigious, schedules. People, especially pilots, are willing to put up with a lot early on because they are confident that sticking with the plan will eventually allow them to earn double and triple their early-career salaries.

Same thing happens in law, investment banking, etc... the hardest workers are often the youngest and least-paid. They do it because they know big money may come later.

> That was surprising. Goes against the idea that deregulation allows companies to squeeze consumers and earn excess profits.

It really depends on the market. In a potentially competitive market, deregulation can work as a function to drive down margins.

Air travel is such a market. Prior to deregulation, routes were set by government action and competition was limited. With deregulation, it's not that hard to setup a commercial scheduled airline, and new airlines popup relatively frequently to address routes where there is margin. It doesn't take that much capital to start an airline; you can lease the aircraft and contract out maintenance (might be part of the lease) and start with a single round trip per day. You don't need to start with a big network or a lot of aircraft. It's not so easy to get slots at busy airports, but you don't have to start there either.

Where deregulation ends up leading to outsized profits is where the market leads to natural monopoly and regulation provides an upper bound on margin, rather than a lower bound. Things like last mile utilities, where it's difficult to run multiple networks in the same space: ex water, sewage, electricity, telecom. In situations like that, to promote competition you want to do regulated unbundling, so there's one organization that runs the last mile and choices for service over the last mile: ex you pay the last mile for delivery of water per acre foot and also your water supplier who must deliver the same number of acre feet to the water network. (or probably a little more, water networks have shrinkage)

Maybe not related but fascinating: "Annual spending on Delta-branded American Express cards comes out to about 1 percent of U.S. GDP. In 2025, this produced about $8 billion in revenue for Delta, accounting for more than the entirety of its profit."

Southwest was very different and I personally preferred it. But Now it’s undifferentiated itself.

I have no reason to prefer it anymore other than if it’s the best on route and price. After all, it’s undifferentiated now.

Chapter 11 bankruptcy as well as all modern corporate law has its roots in the tycoons of the late 19th century. They lobbied and wrote it which is why it's corrupt.

I'd never given a lot of thought but the proliferation of budget airlines creating a race to the bottom always made it seem like airlines were a bad investment.

The article touches on this. Pilot wages are very similar across major US airlines due to heavy unionization and pattern bargaining, so labor is more-or-less a fixed cost (and not the biggest fixed cost). Additionally, pilots can and do take pay cuts in lean times. The pilots at my own airline saw a 20% pay cut in the contract following 9/11 and very reduced wage growth for a decade after that. Management took something like a 5% cut and kept the retirement benefits we lost.

Edit: I thought I recognized your name, I see we discussed pilot unions together on HN a few years back. Can I ask what you have against us? Out of genuine curiosity.

This is capitalism working as intended. Only the best run airlines can survive, and investors are collectively subsidizing air travel for non-investors.

United’s pre-flight safety notices make it appear as if they spared no expense…

Budget airlines have tried all of these things. Planes doing short haul routes often don't have comforts like screens, let alone meal service.

It turns out that in-flight entertainment helps minimize unruly passengers, and flight attendants are there for safety, not just to serve passengers. Same for legroom requirements (egress).

Often airlines engage in merger rather than collapse. See US Airways (bankrupt) + America West, and later American Airlines (bankrupt) + US Airways.

I think the bankruptcy process does tend to lead toward spectacular failure when the cost of operating is too far above the revenue from operating. Decreasing operations during bankruptcy makes the company less attractive and may not even significantly help the net revenue situation. You really need to be solvent or nearly solvent to have an orderly winding down.