So if cargo is more profitable and the airlines back then were carrying more cargo than passengers, why did so many airlines struggle financially? Why don't they today reduce the number of passengers they carry so they can carry more cargo?
Because of our general economic model of competition, and price undercutting into loss ranges on some routes to drive smaller competitors out of business consolidating market share which boosts stock valuation. Once you add market speculation to an industry, then real numbers no longer matter, just the numbers that drive perception. The overall goal of a business is to grow shareholder value, that is not quite the same as business value as "corporate raider" mentality can provide a better shareholder value than a profitable business depending on the value the majority shareholders are looking for.
IOW, Deregulation of the airlines is what created this situation. Good for consumer prices, bad for airline market stability.
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