RE and economic charts: The End is Near = Once-mighty Mesa Air Group must shrink substantially to survive

Monday, June 28, 2010

The End is Near = Once-mighty Mesa Air Group must shrink substantially to survive

[mEDITate-OR

do like Jesus..., let others do unto you what you did to them...

{or something like that...}

What Mesa did to Aloha Airlines is now being done to them. Ha!

When confronted with a huge oversupply of planes, Mesa got the brilliant idea of WalMart-ing Hawaii.

Flood the market with cheap competition - drive everyone else out - take over the whole market.

The economic theory was simple - it is similar to the political theory of the Expandable Forum.

If you are not winning, or loosing, in the forum you are in, change the size of the forum.

Shrink it by eliminating those who don't like you; VS expand it by including those who don't know you.

Stuck with long term leases, signed for lower costs, Mesa did not have enough income to "cover" them. So, since the Lessors would not or could not take them back, Mesa either was going BK, or they had to try something else. That was to sell seats in Hawaii for "cost" or less, in order to raise enough money to pay for the leases.

Sadly, Aloha and Hawaii airlines fought back.

Mesa is now like a bigamist - almost all of its "marriages" are going from bad to worse.

Being "rejected" by everyone is not fun.