> With the dawn of the 1980s, however, Boeing’s traditional way of doing things seemed increasingly out of touch. Deregulation under US presidents Jimmy Carter and Ronald Reagan had changed the economics of the industry, Greenberg said. “The idea was that if you had more competition, it would drop prices for consumers. Suddenly, airlines are looking at this and saying, ‘Oh my God, we can’t pass on the cost by continuously raising ticket prices.’ That put pressure back on Boeing, and on Airbus eventually, to become cost-conscious.”
I think the ultimate root cause that led to the 737 MAX crisis was de-regulation and the airlines race to the bottom on price. The whole reason for making the plane a 737 and not a new aircraft was to cut pilot re-training costs.
I used to think that highly competitive markets with low prices are the best, but now I am not so sure. Those kind of markets tend to push the quality down as well as squeeze the workers. Compare the union workers for the Big Three during the 1970's to that of the gig economy workers now. Maybe an oligopoly with high profits and strong unions is what is best in the long term? Or maybe, we need to alternate periods of disruption and highly competitive markets with periods of stability and oligopolies? I suspect we as a society will have to try to figure that out, and that it is not a simple answer.
I think the ultimate root cause that led to the 737 MAX crisis was de-regulation and the airlines race to the bottom on price. The whole reason for making the plane a 737 and not a new aircraft was to cut pilot re-training costs.
I used to think that highly competitive markets with low prices are the best, but now I am not so sure. Those kind of markets tend to push the quality down as well as squeeze the workers. Compare the union workers for the Big Three during the 1970's to that of the gig economy workers now. Maybe an oligopoly with high profits and strong unions is what is best in the long term? Or maybe, we need to alternate periods of disruption and highly competitive markets with periods of stability and oligopolies? I suspect we as a society will have to try to figure that out, and that it is not a simple answer.