How the beer industry could save the airlines

— -- Can someone explain to me why we can have a global beer industry but not a global airline industry?

I recently read that Anheuser-Busch InBev, the enormous beverage company that brews Budweiser -- and itself the product of the merger of two companies based in two different countries -- has bought Grupo Modelo, the people who bring you those clever Corona beer ads, for $20 billion.

A few pages away, I read of the misfortunes of Japan Airlines, struggling to emerge from bankruptcy after leaving shareholders and other creditors on the hook for 25 billion yen (about $316 million) in debt.

And speaking of beer and airlines, there's the curious case of Kingfisher Airlines, India's second largest. This is a carrier that has never made a profit and would have ceased flying long ago were it not for the fact that its owner and CEO, beer baron Vijay Mallya, keeps it afloat by subsidizing losses with profits from his beverage company, much to the chagrin of his investors.

Why? Why does Japan need two major international airlines? Why does Mr. Mallya keep on sinking money into a losing proposition? Wouldn't it be better if, like the banking, auto, mining and many other industries, the airline industry were allowed to consolidate across international borders?

As my astute airline geek readers already know, that's not possible under current -and insanely outdated—laws and international treaties. No foreign carrier is allowed to own more than 49 percent of a U.S. airline, and there are similar laws in other countries. And airlines are not allowed to fly on any route they wish to serve.

I've heard and read all the arguments for this. National security is the one cited most often. In times of war, U.S. airlines are called upon to ship troops overseas and bring them back home. In this scenario, supporters of the current rules argue, if an airline were owned by, say, China (which would never happen), then presumably the Chinese government could withhold cooperation. I have a feeling that the U.S. military has enough troop transporters to handle their needs, and besides, I'm sure that it would have some means to requisition passenger jets based on U.S. soil, even if owned by a global airline company, during war time.

I think a lot of the reason why North America has over 100 airlines, and Europe has almost as many, is part national pride and part individual ego. Remember when Donald Trump festooned his name on an airline, taking over the Eastern Shuttle when that airline went belly up? What was that all about? And as much as I love Virgin America and Virgin Atlantic, let's face it: Those airlines reflect the ebullient personality of their progenitor, Richard Branson. Boys and their toys.

As for national pride, it just seems silly, and economically unviable, for every little country to have its own airline, as Hungary finally realized when it took Malev off life support and Belgium let Sabena go under.

Explains industry observer Bill McGee, whose new book Attention All Passengers documents the industry's race to the bottom, "There's no question that airlines are intrinsic to national pride. I once had an airline exec tell me that a country may not have its own army or currency, but it has to have a flag, a national anthem, and an airline."

So I think it's time to change the laws and rationalize the industry. For one thing, there would be huge cost savings. To their credit, the Europeans allow cross-border mergers within Europe, as when Air France bought KLM, although both brands were maintained separately. And antitrust regulators have allowed multi-national joint marketing agreements (witness American, British Airways, and Iberia), and global alliances (oneworld, Star Alliance, and SkyTeam). But those aren't the same things.

No, this would not lead to higher fares. There would still be too many airlines chasing too few "discretionary" travelers (the ones who don't have to fly, who seek other means of transportation or stay home when airfares are too high). What it would lead to is better service and perhaps even lower fares as cost savings generated by economies of scale are passed on to consumers.

It would also lead to a more stable industry: fewer sudden bankruptcies, fewer passengers stranded far from home when an airline ceases flying, fewer creditors and employee pension plans wiped out by untenable business plans. And it would put an end to airlines losing billions decade after decade, eking out profit margins that other industries laugh at (0.5 percent this year, according to best-case estimates), by selling their seats for less than it actually costs to provide them.

Airlines allowed to compete by the same rules as beer companies? I think it's something we can all drink to.

George Hobica is the founder of Airfarewatchdog.com. Airfarewatchdog features the best airfares on thousands of routes verified by a team of expert fare analysts.