I was reading an article about Aloha Airlines going belly up after 60 years of service, and it got me to thinking. The reason cited for the closing is another carrier starting up and pricing service below cost. With deep enough pockets you can do this till the other guy folds, then you have the market. All perfectly legal. Just imagine what your retirement account would be worth at Aloha though. Has anyone seen this practice in our business?
What if the airlines got into carwashing?
- Thread starter mac
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Fatboy769
Living the American Dream
Mac, I guess this would kind of fall along the same line. I know of two brother in-laws that were in the oil buisness together, for whatever reason, they split up and each one had their own oil company. Wherever one would build a car wash, the other would build one either across the street or right beside it. These were SS washes with a minimum of 8 bays, but mostly 10. Eventually, they both went belly up.
Earl Weiss
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Standard Oil tried this years ago, and it basicaly lead to their break up. Pricing below "Cost" is illegal. Now, theissue is how to determine cost, since overhaed can fluctuate widely.
Lets say one operator has been in business for 30 years, and paid of all debt and owns the property. Now, someone new comes into the market and spends a million $ plus. Sure, if they have deep pockest they can have zero debt and compete head to head, but why? They would do a lot better off putting their Million$ to work elsewhere.
Lets say one operator has been in business for 30 years, and paid of all debt and owns the property. Now, someone new comes into the market and spends a million $ plus. Sure, if they have deep pockest they can have zero debt and compete head to head, but why? They would do a lot better off putting their Million$ to work elsewhere.
pitzerwm
Active member
The Sherman Anti Trust Law prevents selling below cost. There have been a number of national chains sued for doing this and they lose. Its do able but most companies will buy out the competition rather than go to battle.
Ben's Car Wash
Conveyor & self service
You can't compare Airlines to car washes... or airlines to almost any other industry in the World in History. The reason is that, I think I read the number is 70% of them fly while under the protection of Chapter 11 leaving them to lower debts below what they could normally maintain as an industry. This "protection", along with the government interfering or proping them up (not going there today) with subsides {the essential air service program} is unlike any other industry that we have.
So no... I can not see a car wash doing what airlines do! No one would stand for it. How can you stay bankrupt year after year.... and still be in business?
So no... I can not see a car wash doing what airlines do! No one would stand for it. How can you stay bankrupt year after year.... and still be in business?
I have also seen this in our business. This happened in Arkansas, I believe, about 20 years ago. A wealthy guy would go into a new town and build a new wash and simply price the older one out of business. The guy who told me about it, talked to the new guy and said, he would just sell his business. Just make an offer. The new guy replied, I don't want your business, I want to put you out of business. If you have enough money, and resemble an extremely large human appendage, you can do it.
I have seen this happen in many parts of the country. I have also seen it work in reverse. In one small town in a guy built a brand new tunnel to compete with a tunnel that had been there for many years. Unfortunately for the new guy the older wash was paid for. The resulting price war put the new guy out of business within a year. The other guy bought the new wash in a bankruptcy deal from the bank and now totally controlled that wash market. So it can work both ways.
robert roman
Bob Roman
Ultimately, not even the consumer wins in a price war. In the short-run, consumers will benefit from lower prices but eventually the low price game erodes the value of companies products and services and the customer losses in the long-run. Just ask anyone who owns a Dell computer or printer. The quality of Dell's products and customer service has dropped to such a dismal level that I can't figure out how the company makes any money. I will never buy another product from them.
Even Wal-Mart is feeling the reverberations of extending everyone including their customers on the notion of low price at any cost. I haven't shopped at Wal-Mart for years. Their stores are great if you need an endless supply of meat or toilet paper but over 75% of their merchandise is just cheap junk from overseas and there is little selection.
Even Wal-Mart is feeling the reverberations of extending everyone including their customers on the notion of low price at any cost. I haven't shopped at Wal-Mart for years. Their stores are great if you need an endless supply of meat or toilet paper but over 75% of their merchandise is just cheap junk from overseas and there is little selection.
