Last week, American Airlines became a member of a club it hoped never to be a part of — major airlines that have declared bankruptcy. Before American came Pan Am, Delta, United, Northwest, US Airways, and Continental.
Sure, fuel costs are high and planes expensive — but why is it that the industry continues to lose money year after year? By economist Severin Borenstein's count, domestic airlines have lost $60 billion dollars in the last three decades.
Even airline executives don't deny it. Bob Crandall, the former CEO of American, famous for calling it a "nasty, rotten business," says he used to tell his employees not to buy the company's stock. Why? "Because airlines don't make money," says Crandall.
On the show today, Crandall tells us why running an airline is so darn hard, and Severin Borenstein explains why all these bankruptcies are actually good news for us, the passengers.