The Failure of Virgin America

In this Slate article, the author laments the inevitable fall from grace that many industry upstarts experience after promising beginnings, and even goes so far as to propose that the flying public wants poor airline service. That's a bit of a stretch for sure, but it certainly makes you wonder: is Southwest really the only consistently profitable business model? Is their fuel hedging really the main factor that drives their profits, given that avgas is the most costly business expense in this industry? Based on recent financial statements, jetBlue also seems to be profitable, or is that just a function of recent growth?

More than thirty years after deregulation, the commercial aviation sector remains an hostile environment for new entrants, who sooner or later get 'squeezed out' of their markets by the legacies, who themselves have been turning to consolidation as a competitive practice now that price wars don't work as well as they once did.

I'm no MBA, so I'd love to hear what folks here think, given your ties to the industry.

http://www.slate.com/blogs/moneybox/..._all_your.html