Wed, Jan 18, 2012
Says Of Consolidation, Higher Fares, 'Why Not?'
In an interview on Bloomberg TV Monday, JetBlue Airways CEO
David Barger was asked about the bankruptcy of AMR, the parent
company of American Airlines and American Eagle. He explained how
the process will be good for American and for the industry, but his
comments on why it's good for consumers may be a tough sell.
Regarding what could be a developing bidding war for AMR with
suitors including Delta and US Airways, Barger said his company
will stay out of that fray, maintaining its core philosophy of
growing organically, rather than through mergers and acquisitions.
But he praised American and said that, despite the bankruptcy, it
represents a "great brand, been around for decades, a lot of
strategy in terms of that network, and the process is tough but
obviously it's going to be good for that brand in the long
Regarding the effect on consumers of industry consolidation,
fewer players, reduced capacity and higher prices, Barger noted
that, adjusted for inflation, airline prices actually dropped 20
percent from 2000 to 2010. (He didn't say whether that accounts for
all the new a la carte fees.) Barger said passengers need to be
educated on costs, including the 30-40 percent represented by fuel,
and that higher fares might be just the way to do it.
"I think fares going higher, consumers sharing in the cost of
energy, that’s not a bad thing. They’re seeing it at
the pumps, why not with the aviation tickets?"
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