It's time to stop waving the Open Skies banner

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Reader Comments (Page 1 of 1)

4-03-2008 @ 3:33PM

john said...

The Econ101 principles still apply, people are just applying them wrong. It's not that airfares are going to go down this summer because of Open Skies, it's that they'll be somewhat less than they would have been without Open Skies. Other factors, as you mention, like costs and (especially) demand still flex their muscles.

Capacity definitely matters though. Successfully keeping capacity restrained is a major reason why airlines have been able to increase fares over the last few years. They didn't race to expand like in earlier demand booms.

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