Why Airlines Can't Make Money: A Book Review of Pilarski
This paper reviews Adam Pilarski's book Why We Can't Make Money in Aviation, which examines the persistent unprofitability of the airline industry. The review summarizes Pilarski's three-category framework — exogenous factors, endogenous factors, and government overregulation — and evaluates his conclusion that poor financial performance is largely self-inflicted by airline companies themselves. The reviewer affirms Pilarski's methodological rigor while adding an original critique: that the industry's underperformance stems not merely from excess competition but from a fundamental lack of product differentiation among major carriers. The paper concludes that Pilarski's analysis serves as a constructive call to action for an industry capable of reforming itself.
- Introduction: Introduces Pilarski's core question and thesis
- Background and Framework: Outlines Pilarski's three explanatory categories
- Exogenous Factors: Reviews industry-level causes Pilarski mostly rejects
- Endogenous Factors and Overregulation: Self-inflicted problems and government regulation arguments
- Analysis and Product Differentiation: Reviewer's critique adds product differentiation argument
- Conclusion: Book affirmed as constructive industry wake-up call
✍️ How to write this paper — guide, tools & examples ▾
What makes this paper effective
- The review goes beyond summarizing Pilarski's argument to offer an original critique — the lack of product differentiation — that extends and enriches the analysis.
- The three-category framework (exogenous, endogenous, overregulation) is clearly presented and consistently applied throughout, giving the review strong organizational coherence.
- The reviewer uses concrete examples such as Southwest Airlines and the Continental/Delta comparison to ground abstract economic arguments in observable industry realities.
Key academic technique demonstrated
The paper demonstrates critical synthesis: rather than simply accepting or rejecting an author's thesis, the reviewer evaluates each sub-argument on its merits, affirms what is methodologically sound, and identifies a gap in the analysis. This move — agreeing with Pilarski's broader conclusion while adding a missing variable — models sophisticated academic engagement with a source text.
Structure breakdown
The paper opens with a thesis-framed introduction, transitions into a background section that maps Pilarski's framework, then works through each category of explanation in sequence. A dedicated analysis section both praises Pilarski's method and introduces the reviewer's original product-differentiation argument. A brief conclusion reinforces the book's practical implications. This structure mirrors a standard book review format suitable for undergraduate business or economics courses.
Introduction
In the book Why We Can't Make Money in Aviation, Adam Pilarski addresses a perplexing and costly business problem: why are airline companies so consistently unprofitable? This question is important not only for investors and students of business management, but for American taxpayers as well. The airline industry is one of the most highly subsidized industries in the United States.
Pilarski surveys the various explanations offered for the poor financial performance of the airline industry and attributes it to a variety of factors. He splits these explanations into three categories: factors caused by the nature of the airline industry itself, factors caused by the airline companies, and factors caused by government. Pilarski critically evaluates each explanation and rejects most of them. The only explanations he finds convincing are those which assign culpability to the airline companies themselves.
Pilarski's critique of these explanations is incisive. It reveals widespread misconceptions about the airline industry and about basic economics in general. Pilarski shows that many explanations sound plausible — even reasonable — on the surface, but collapse under even the most cursory investigation.
Background and Framework
Pilarski attributes the poor performance of airlines to a number of different factors, devoting a chapter to each one. He organizes these factors into three categories: exogenous factors (originating outside the companies), endogenous factors (originating within the airline companies), and overregulation imposed by government.
Exogenous Factors
Pilarski reviews the explanations claiming that the problems are caused by certain industry realities — what he terms "the nature of the beast" factors. Because these are outside the control of individual airline companies, he labels them exogenous. These factors include cyclicality, ease of access to capital, cost of aircraft, excessive competition, and the naivety of market entrants in the airline industry.
Pilarski rejects the explanations based on cyclicality, cost of aircraft, and excessive competition. Regarding the argument that there are too many competitors, he notes that even if the number of competitors were reduced from six to three, the remaining three companies would still employ the same ineffective business practices, leading to the same poor financial performance.
Pilarski does, however, accept that the ease of access to airplane financing may be eroding financial discipline among airline companies. He argues that easy financing floods the airline industry with weak players who would normally be weeded out at the financing stage in most other industries. Additionally, Pilarski considers the possibility that the prestige and cachet of the airline industry attract a disproportionate number of naive market entrants — "dreamers and suckers," as he calls them.
Conclusion
Pilarski's book is a welcome wake-up call for all observers who believed that the aviation industry is simply a flawed business model. Pilarski demonstrates that the most significant problems facing airline companies are self-inflicted. This conclusion is ultimately optimistic: it means not only that airline companies bear responsibility for their difficulties, but that they have the capacity to help themselves back to profitability.
References
Pilarski, A. (2007). Why Can't We Make Money in Aviation? Hampshire: Ashgate.
Create your account
Always verify citation format against your institution’s current style guide requirements.