Bob Crandall, former Chairman of American Airlines, wrote an Op-Ed column for the New York Times on April 21. His critique of current conditions is right on, and his proposals for improved infrastructure are reasonable, but some of his proposals for reregulation are way off base, and include ideas he was flogging twenty years ago.
His analysis of current conditions is concise:
“Our airlines, once world leaders, are now laggards in every category, including fleet age, service quality and international reputation. Fewer and fewer flights are on time. Airport congestion has become a staple of late-night comedy shows. An ever higher percentage of bags are lost or sent to the wrong airports. Last-minute seats are harder and harder to find. Passenger complaints have skyrocketed. Airline service, by any standard, has become unacceptable.”
He also correctly concludes that mergers such as Delta-Northwest are not the solution:
But the case for mergers is unpersuasive. Mergers will not lower fuel prices. They will not increase economies of scale for already sizable major airlines. They will create very large costs related to consolidation. And they will anger airline employees, who will perceive themselves to be hurt by the mergers.
Crandall believes that market-based approaches are not adequate to produce the aviation system that this country requires. He strongly supports the conversion to the Next Generation ATC system, and complains that Congress has not appropriated enough money to implement it promptly. In the meantime, however, he believes airline schedules at major airports should be reduced. Since airlines cannot unilaterally reduce flights without being placed at a competitive disadvantage, the only solution is for the government to limit flights to the level that the system can handle.
Crandall would also impose new financial standards on new entrants to ensure they have adequate capital. He notes that nearly 200 new entrants have disappeared since deregulation, after cutting prices in order to survive and imposing substantial losses on more solvent competitors.
Finally, he includes a laundry list of regulation that was at issue when he was running the airline, but which seem to have been long resolved – less reliance on offshore maintenance bases, stop the U.S. giveaway of access to the largest and most profitable market in the world, reform the bankruptcy laws so a carrier that files bankruptcy has to shut down, and binding arbitration of labor disputes. All these ideas may have had merit in the past, but the idea of implementing them now, with so much history since they were proposed, is simply not possible.
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