(American Airlines Boeing 777.Flickr/Eric Salard)
For the second time in six months, Warren Buffett's Berkshire Hathaway invested billions of dollars into the US airline industry.
In total, Buffett's investment in American, Delta, United, and Southwest Airlines now totals nearly $10 billion.
The move is a stunning change of heart for Buffett, who as recently as 2013 referred to the US airline industry as a "deathtrap for investors."
However, it is the consistency of Buffett's investment in America's big four airlines —$2.1 billion in American, $2.2 billion in United, $2.4 billion in Southwest, and $3 billion in Delta — that's most enlightening.
Instead of picking a single winner among the airlines, he's spreading the bet between all four. It's a move that's partly reflective of the strength of the entire US airline industry, but also highlights that — from the perspective of consumers — the airlines offer very little to differentiate themselves from their biggest rivals.
Over the past decade, the landscape of the airline industry in the US has changed greatly. All four airlines have reported record profits, over the past two years, buoyed post-financial crisis capacity discipline, depressed labor costs, and cheap oil.
There are also fewer competitors in the domestic market to contend with.
In the year 2000, the sky was filled with names such as America West, US Airways, TWA, AirTran, Continental, ATA, and Northwest Airlines. By 2016, all of these brands had disappeared by being merged into or acquired by the Big Four.
As a result, apart from boutique airlines (Virgin American, JetBlue), regional brands (Alaska, Hawaiian), and ultra-low cost carriers (Spirit, Frontier) on the fringe, the Big Four only have to contend with themselves.
(Delta Airlines cabin.Delta)
This is especially the case for American, Delta, and United — the nation's three remaining full-service legacy carriers. For instance, in early 2015, Delta changed its frequent-flyer program from a mileage-based system to one based on revenue. This means that instead of awarding passengers based on the number of miles flown, the new system would calculate frequent-flyer miles based on the amount of money spent.
United and American soon followed suit, releasing programs essentially identical to that offered by Delta.
The same thing happened when it was time to implement a basic economy fare class and baggage fees.
As a result, customer experience on board the four main airlines in the US is essentially the same. Most flyers get essentially the same quality service, amenities, and room across the range of airlines.