I’m not too good at reading minds, much less corporate minds, but one thing stands out: For all practical purposes, domestic airlines in the US today are monopolies. They have left just enough market share at their primary hubs to avoid the threat of federal action, and this limited capacity means that open skies treaties won’t significantly increase competition.
When your orientation says “monopoly,” you act like a monopoly. In particular, without the threat of the marketplace, you have a lot of flexibility in the levels of service you provide — your quality — and in what you can charge. Play this game well and you can maximize the amount of money to be paid out to the the people who control the organization and to those who can fire them.
However, as Tom Peters once pointed out, in Thriving on Chaos as I recall, after some point, it’s impossible to order cost cuts without also damaging the customer experience.
Back in the pre-Toyota US auto industry, they had a similar orientation: Customers didn’t appreciate quality and wouldn’t pay for improvements in quality over what Detroit was already producing. As I said, that was pre-Toyota. But weren’t Toyotas cheaper than their American competitors? They were indeed less expensive, but their quality in terms of manufacturing defects and ride experience, was much higher. Detroit claimed “Dumping!” but extensive studies showed that Toyota had evolved a manufacturing system that reduced waste thereby lowering costs organically, rather than just arbitrarily cutting costs by leaving out things.