[rapatel0]

Power companies are the classic example. If power companies were forced to compete, their costs + competition tend to drive them out of business. As a result most power companies are forced to operate in really tight constraints with very limited but predictable margin.

I'm not saying that this a better outcome (power companies have their problems too). I was just commenting that this issue parallels the historical solution that was applied to utility companies.

[granzymes]

Power companies are a classic example of a natural monopoly because they require a ton of extremely expensive physical infrastructure to connect every house to the grid that would be wasteful to duplicate for every competitor.

The whole point of airplanes is that they require no physical infrastructure between point A and point B.

You can have competing power companies generating the power if the grid is owned by the state (or a regulated monopoly). Coincidentally, that is a good mental model for airlines because airports are often state-owned or if not are highly regulated.

[allanca]

I'm starting to come around to seeing airports the same way. Airplanes need "a ton of extremely expensive physical infrastructure to connect every" city to the grid.

That's why the creditors let Spirit die. Their airport slots and gates are more valuable than the rest of the company combined.

[rapatel0]

Fair point and I don't disagree. The more meta point I would make is that airlines are still fairly capex heavy (even if there is no point-to-point infrastructure). Each incremental new route operating during standard hours still requires 90m+ on a new airplane.

So if they tend to compete themselves into oblivion, or need to turn into banks to subsidize their product, then it might make sense that they should be regulated monopolies.

Still you're probably right, if they can turn into banks and stay profitable, then maybe that's a better market outcome overall.