MarinerOne

No one would accuse Bob Crandall of being shy. The legendary former CEO of American Airlines, who is widely credited with developing the hub-and-spoke system and inventing the frequent flier program, always speaks his mind. And the aviation world is abuzz with what he's been saying lately.

Crandall considers the deregulation of commercial aviation a huge failure and says it's time to bring back government oversight of fares and pricing. "It's time to acknowledge that airlines are more like utilities than ordinary businesses," he said during a speech at the Wings Club, a cushy meeting spot for the industry's heaviest hitters. "We have failed to confront the reality that unfettered competition just doesn't work very well in certain industries, as aptly demonstrated by our airline experience."

Jeez. Don't sugar coat it, Bob.

Crandall's got no shortage of ideas for saving the industry from itself. Some of them might actually work.

Most of the major airlines - United being the main exception - actively opposed deregulation when Congress approved it in 1978. The Airline Deregulation Act ended 40 years of oversight by the Civil Aeronautics Board, which dictated everything from who could enter to the market to which routes carriers could fly. It also set the fare structure.

But Congress thought regulation had made a mess of the air travel industry and felt, in the words of the Airline Deregulation Act, that "maximum reliance on competitive market forces" would spur "efficiency, innovation, and low prices" while expanding consumer choice in air travel.

To be fair, deregulation did bring lower fares and low-fare airlines like Southwest and JetBlue. But can anyone look at the state of the industry these days - it expects to lose as much as $6.1 billion this year - and say air travel's grown more efficient or innovative? Crandall, who was president of American from 1980 to 1995 and chairman / CEO from 1985 to 1998, concedes free markets work for most businesses, but says airlines aren't like most businesses. He proposes an industry re-regulation scheme that would include:

READ ON ...

The Case for Re-Regulating The Airline Industry | Autopia from Wired.com

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MarinerOne

I think RE-regulation is NOT the answer, but at the same time, the way things are with the "competitive" environment and HIGH fuel prices, something DEFINITELY needs to be done before all the MAJORS are gone.

I don't have the answers, but the status quo certainly isn't going to work with our economic problems.

B773ER

Yup, I read a little while ago that U.S. Airways is the next airline eliminating employees and aircraft, and starting to charge for the first checked bag. They're also eliminating free beverage service in coach - it will now cost $2.00 for a beverage in coach class.

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Horizon CRJ700

Re-regulation is not the solution to this problem.

As long as WN has such low fares, and can continue to fly people at low cost with their hedges, the airlines will continue to lose money.

What the airlines don't realise is that WN can only fly so many planes on their hedges. yes, WN WILL fill up all of their planes, but not everyone can travel on WN's planes and the capacity will soon become filled up. Naturally, this would cause WN to add more capacity, but with cuts in the availability of aircraft, and the limits to their fuel hedges, soon they would have to raise prices too.

If the airlines don't increase prices, become more streamlined, and figure out ways to save money that the customer do not affect the customer, then the airlines will be successful. Regulation is the easy, lazy answer to a problem that needs to be fixed by the airlines themselves.

Opponents to keeping the market deregulated will claim that Southwest will expand and soon have a monopoly, but, the great thing is, that ANYONE can enter the market, if WN decides to raise its prices because it has a monopoly on the market, another airline will come in and provide competition to WN.

That is precisely why the industry was deregulated, to get rid of the bad apples, and to provide a more competitive market. Because of the low cost of oil, we are just beginning to feel the real effects of deregulation today.

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"the first thing any country, no matter how poor it is or how war-torn, must do upon independence is buy a 747 and fly it to Heathrow".