Richard
Final Approach
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- Feb 27, 2005
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- 9,076
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- West Coast Resistance
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Ack...city life
After reading this article it occured to me that some smart bean counter figured out how to use bankruptcy as leverage against the discount carriers. Whaddya' think?
GAO: Bankruptcy may not be so bad: Despite complaints to the contrary, "there is no clear evidence" that airlines operating under Chapter 11 bankruptcy protection "harm the industry by contributing to overcapacity or underpricing their competitors." That's according to Air Transport World (ATW), which cites a study by the U.S. General Accounting Office (GAO), the agency the serves as the investigative and research arm of Congress. In fact, the GAO study found that the liquidation of airlines "had only a very temporary or negligible effect" in reducing overcapacity since other airlines tend to rush in to fill the void. In what ATW says may be one of the report's more controversial findings, the GAO speculates that companies who rent to or do business with airlines are happy with the industry's current capacity levels. "Those companies further up the value chain face less competition and are able to impose higher costs on airlines," ATW cites the report as saying. "Accordingly, these companies have a vested interest in ensuring that airlines survive and that capacity [does] not leave the industry."
GAO: Bankruptcy may not be so bad: Despite complaints to the contrary, "there is no clear evidence" that airlines operating under Chapter 11 bankruptcy protection "harm the industry by contributing to overcapacity or underpricing their competitors." That's according to Air Transport World (ATW), which cites a study by the U.S. General Accounting Office (GAO), the agency the serves as the investigative and research arm of Congress. In fact, the GAO study found that the liquidation of airlines "had only a very temporary or negligible effect" in reducing overcapacity since other airlines tend to rush in to fill the void. In what ATW says may be one of the report's more controversial findings, the GAO speculates that companies who rent to or do business with airlines are happy with the industry's current capacity levels. "Those companies further up the value chain face less competition and are able to impose higher costs on airlines," ATW cites the report as saying. "Accordingly, these companies have a vested interest in ensuring that airlines survive and that capacity [does] not leave the industry."