[nextstep]

New airlines can usually undercut older airlines because they don't have the same liabilities (pensions, debts from bad business practice over the years, etc.) and so they are usually great for a few years but then they evolve into the same shitty carriers that they compete with. In JetBlue's case, they were initially given a large tax break by NYC/JFK. When that subsidy expired they immediately started to charge for bags, reduce perks like better snacks, etc.

http://money.cnn.com/2015/06/30/pf/jetblue-checked-bag-fee/

[tyingq]

Many of the "old" airlines have filed bankruptcy several times, which gives you a sort of do-over on employee contract terms, pensions, etc. They've been able to shed debt that way and be more "new".

Southwest has some of the highest labor costs in the industry, having never filed bankruptcy.

[SilasX]

That's a problem with the regulations regarding pension funding, not a general new-company advantage. It should never have been possible for a company to give a pension as compensation that in any way that coupled the pension to their future viability.

[tyingq]

I don't think any regulations forced airlines to make poor pension decisions. Airlines and unions managed to do that themselves, for the most part.

[mwytock]

I see, that's interesting.

It does seem to be a tough business, but I guess don't see why it's not "naturally competitive" (as the author claims)