Why does the airline industry always need bailouts and government subsidies and operates very inefficiently?
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I would argue that is because it is too efficient and competitive and doesn’t generate enough profits to stay afloat. There are many articles about this for example.
https://www.theatlantic.com/business/archive/2013/02/how-airline-ticket-prices-fell-50-in-30-years-and-why-nobody-noticed/273506/
https://www.theatlantic.com/business/archive/2013/02/how-airline-ticket-prices-fell-50-in-30-years-and-why-nobody-noticed/273506/
https://www.businessinsider.com/cost-of-flying-has-decreased-2015-10
There has been no major technological breakthrough that would make it fundamentally cheaper since the introduction of wide bodied aircraft in the early 70s.
Deregulation was the biggest driver of price dropping since then but I would argue that the industry suffers from a lack of investment. It really should be somewhat more expensive to generate the investment to make it better.
“Operating efficiently” is the same as operating closer to the brink of collapse. Safety margins are costly, so if a competitor comes along that has less margins, they win out and you go under. Tons of laws, regulations and inspections make sure the actual margins of life and death aren’t violated too much, though it still happens.
Air travel goes through boom and bust cycles in line with overall economic cycles — people and businesses cut discretionary travel in recessions, for example. Fuel costs are also super variable and have a huge impact on flight operating costs. But it’s hard for airlines to just cut unprofitable routes short term between locations because people have booked far out, because airlines have to bid/own gate slots, because of importance of having a network connecting smaller cities to big hubs. Having a functional network of flights and airports is critical to the economy as a whole, so the government sees it as beneficial to provide bailouts rather than have airlines decide it’s not profitable to fly into/out of second and third tier airports and cut off places like Omaha, Toledo, and Albuquerque
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