A Stitch in Haste

Not a good week for the airline industry, as two major carriers experienced, shall we say, "problems." One carrier, Comair, described their computer troubles as a "major system meltdown." The other, chronically troubled US Airways, was the victim of a vast labor union conspiracy an unusually high number of sick-days. Virginia Postrel is playing central planner today and calling for the liquidation of US Air.

As I have blogged previously, these are perilous times for the airline industry, not just because they are (still) losing money hand over fist, but also because the entire industry is, arguably, operating under a fundamentally flawed business model that could, in a doomsday scenario, bring down the entire commercial air travel business.

Just like the railroads thirty years ago. That time the government stepped in, "stabilized" the industry...and gave us Amtrak.

Of course, the airline industry has somewhat greater flexibility to respond to changing market conditions than did the railroads of a half century ago. Planes can be moved, gates bought and sold, schedules altered, expanded, contracted, etc., far more easily than a train running on a track between New York and Philadelphia. On the other hand, commercial aviation is far larger than passenger rail ever was, and faces a far more competitive structure than did the railroads.

At what point will the calls for greater government "participation" in the airline industry, like the old Civil Aeronautics Board, begin to reverberate through the nation -- and through Washington?

Perhaps it's already beginning:

Since 2000, the big airlines have eliminated more than 100 cities from their schedules as they sort out where they can afford to fly on the fares consumers will pay, according to an estimate by Back Aviation Solutions, an industry consulting firm.

At least people in Evansville [Indiana] have other options. One-third of the nation's 609 airports offering daily flights are served by just one airline, said Michael Allen, the chief operating officer at Back Aviation.

If one company pulls out and another does not pick up its flights, a chain reaction begins: jobs will be lost, communities will have trouble attracting new companies, employers will not be able to easily send employees where they need to go and real estate prices will fall because the cities and towns have become remote. "If you don't have a connection to the outside world, you become less valuable," Mr. Allen said.

"It's fine to say, 'Let market forces prevail,' but you can't do that without examining what the consequences are," said Patricia Friend, president of the Association of Flight Attendants, which has 50,000 members.

Sound familiar? Sound promising?

Now more than ever the airlines must get their acts together and decide how to make their businesses profitable. If it means massive services cuts, then so be it. If it means substantially higher ticket prices, then so be it. If it means all-out war with their labor unions, then so be it.

But the politicians and bureaucrats are unlikely to let the industry gradually decline indefinitely.

No, they're far more likely to kill it off wholesale. Just like they did with the railroads.

Did we move one step closer this weekend to Air Amtrak?

I hope not.

UPDATE: Doesn't it usually begin with a government inquiry?

U.S. Transportation Secretary Norman Mineta said on Monday he was launching a probe of air travel disruptions over the Christmas holiday weekend at US Airways Group Inc. and Delta Air Line Inc.'s regional carrier Comair.

"It is important that the Department and the traveling public understand what happened, why it happened, and whether the carriers properly planned for the holiday travel period and responded appropriately to consumer needs in the aftermath," Mineta said in a statement.

Next will probably be a blue-ribbon bipartisan commission...

For Discussion: Go back to Mr. Allen's quote, supra. Is a town "valuable" because an airline flies there, or does the airline fly there because the town is "valuable"?

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