Berkshire Hathaway Chairman and CEO Warren Buffett appeared on CNBC’s Squawk Box Monday morning and was asked about his outlook on the airline industry.
“It’s a tough business,” Buffett said. “It was a suicidal business for a long time. Having the consolidation that came about through the bankruptcies has made it an extremely competitive business.”
Buffett also discussed the airlines’ competitive pricing models, citing historically low fares for price-conscious passengers.
“A significant percentage [of customers] would rather…fly for X than have far more legroom and all kinds of things and travel for X plus 25 percent. So to some extent, they’ve tried to segment.” When asked if carriers have pushed it too far, he replied: “The customer will tell them.”
“The one thing going for the airlines is they’ve become unbelievably safe,” Buffett added.
When asked if government action is necessary: “If you regulated the airlines – reregulated them…you could have more leg space, you could have no overbooking. Regulate all kinds of things, the cost will go up,” Buffett said.
Expanded fare and service options allow passengers to customize their unique travel experience, personalized to fit their needs and budget. In a competitive marketplace, these increased options allow travelers to create their ideal airline experience, based on what they value.