In the history of commercial air travel (since early 1900’s) if you add up all the profits and all the loses; the industry has made net loss of $1.4 billion.
Two lessons:
- Don’t try and start an airline
- Don’t invest in airline stocks
5 thoughts on “Quirky fact”
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You need to be careful and distinguish between industry and firm outcomes. There are some very successful firms in the airline industry. Prime examples would be Southwest in the US and Ryanair and Easyjet in the US. Buying shares in any of those three would have been a very sensible investment for much of their lives.
Singapore and the new emergent middle eastern national airlines are consistent performers. It’s the old world, old school players that became basketcases. Likewise, there have been rafts of players that wandered in and out of the industry burning $$ like there was no tomorrow.
Most industries have more failures than successes. Ones with huge start-up costs and big exit barriers will tend to produce ugly aggregate outcomes…
Dr Dre, there are some examples of success in the Airline industry, those sited. The question is more would we rather invest in say the banking industry which has made trillions in profit in the same time or in Airlines, where picking 3 stocks in 100 will determine wether or not you lose your pants.
Stevie
My point is that good business models do win out in tough industries. It just forces the folks running the firms to be more capable and innovative. And it mean investors have to look more closely at firm strategies before investing.
Hi Steve,
Just found your blog on the net. Very impressive!! Keep up the good work- I look forward to reading more.
I’ve just started my own blog for budding entrepreneurs following some of my business success. Feel free to check it out some time.
How can i join your blog roll?
Regards
Luke