Sent from my Commodore 64
On Sep 17, 2015, at 2:16 AM, Derek Lyons <fairwater@xxxxxxxxx> wrote:Derek:
On Wed, Sep 16, 2015 at 9:16 PM, David Weinshenker <daze39@xxxxxxxxxxxxx>
wrote:
Bill Claybaugh wrote:
Why assume evil when nature is a sufficient explanation?
Airlines are both commodity businesses--they have no pricing
power--and service businesses--they have inherently high
costs--so they naturally, through competition, fall to no
profit pricing. Space transportation is no different.
So what you're saying is that transportation (space, air, or
otherwise) - as a business - is a relatively pure example of
the sort of "flat and crowded" market in which "racing to the
bottom" may be expected as an emergent behavior?
That seems to be the case in the US... railroads went under left and
right and then the feds stepped in and regulated tariffs and the
situation mostly stabilized (except for the depression and rise of
competition with trucking in the 50's). When they were deregulated
in the 1970's, they started keeling over and being swallowed up on a
regular basis again. The situation is now stabilized with three
major carriers and one minor. Airlines seemed to be mostly stable
until deregulation in the 70's when, as with railroads, they started
keeling over and being swallowed up on a regular basis. The rise of
the budget airline in the last few decades has only increased the
pressure. Depending on how you count, there's only a handful or so of
major carriers nowadays. (Though several of them are their original
selves only on paper - they've gone bankrupt and re-emerged several
times.) I don't know about about the trucking and maritime
industries to comment intelligently, but there are a lot fewer of both
than there used to be.
But the big things that dooms major transport industries don't seem to
apply to space transport as currently established. The first is
aging of the fleet, requiring massive capital to replace which may or
may not be available. This was the case with the railroads in the
1950's, when major competition arose as they were still struggling to
deal with fleet and infrastructure issues that dated in part back to
the teens and twenties (and were in a large part beyond their
control). The second is a mismatch between carrying capacity and
demand - too much of the former and the costs start to drag you down,
too much of the latter and traffic starts to flow towards competitors.
Maintenance issues can also play into both factors. But a launch
provider/airframe manufacturer based on disposables need not build
more vehicles than they need. Once the factory, design, and tooling
costs are amortized out - capitol costs drop precipitously. The trick
then becomes to manage overhead to minimize the impact of varying
flight rates on profitability.
Airframe manufacturers, contrary to an assertion made elsethread,
haven't fared much better than the airlines... we're down to only two
where once their were many. (Though to be honest, some of this is
due to gross mismanagement and/or the vicissitudes of government
procurement cycles.)
D.
