Geography and destiny

摘要

For decades one of the jewels in the old Pan Am World Airways system was its Latin American service, with immensely profitable routes like Miami to Buenos Aires and New York to Caracas. The conventional wisdom was that United Airlines would continue to dominate those markets when it bought the routes from the bankrupt carrier in 1991 for $135 million. Ditto for American Airlines, which bought Eastern's equally strong Latin American routes for about $300 million in 1990. What did United and American get for these outlays? Not planes, which were not included, and only a smattering of hard assets such as ticket counters and airport equipment. What they got, rather, is something that goes nowadays by the name "franchise." This intangible asset獃ou could also call it going-concern value or momentum—represents the ability to wring profits from an activity out of all proportion to the tangible capital employed. In the case of an airline, it includes the legal right to fly a particular route.