Re:The Incredible Shrinking Airline Seat
by justinjlynn on Thursday August 17, 2017 @11:29PM
(#15043332)
Indeed, if they've got an oligopoly then customer comfort is not something they're optimising for. In fact, it never was, in that customer comfort was just a means to attract a larger market share. If that's not a concern market dynamics demand a maximisation of profit including maximisation at the expense of, now irrelevant due to lack of choice, customer comfort.
Delta has an 11% net income margin, a reasonable and normal profit level. $8.9 billion in net income on $80.3 billion in sales the last two fiscal years combined.
Southwest has a similarly solid profit margin. American Airlines would be similar, were it not for their debt load and some non-recurring hits (as it is, their net income margin is closer to 7% to 8%).
Keeping in mind these are net income margins, meaning after taxes. American Airline's operating income margin is closer to 13%. Delta's operating income margin was quite nice given the space, at 17.5%.
The comedy is, the same oligopoly that enables them to now be able to afford to significantly improve the customer experience, is what is likely to ensure they have no interest or need to do so. Perhaps there is still enough competition between the majors to drive that, given they're all relatively flush with cash and profits.