Make Airline CEOs Fly Coach

How that and other plans could actually end up saving the airline industry.

ByABC News
June 17, 2008, 11:20 AM

June 18, 2008 — -- If you heard this from those who run the "grand old airlines" legacy carriers like American, Continental, Delta, Northwest, United, and US Airways what would you suppose they were talking about?

"Hate it!"

"Loathesome."

"Absolutely despicable."

If you guessed soaring fuel prices, you'd be wrong (though of course, they do hate that). No, what I'm talking about is the longtime, everyday enemy of the big boys: the Internet.

Long before oil became the bogeyman of the airline industry, the Internet started killing off profits. Let's go back to the mid to late '90s when some clever people at Microsoft noted that Internet + travel = $$$$ and set in motion the whole shop online for cheap airfare process that allows consumers to compare dozens of prices instantly.

In the old days, who noticed if one airline charged a few bucks (or many bucks) more than a rival? But, they can't get away with that anymore; the rise of de-regulation has spawned lower cost airlines like Southwest and JetBlue that use the Internet to shamelessly flaunt their cheap fares.

And, thanks to the Internet, passengers have been able to take control when it comes to getting great deals. In effect, we have become our own travel agents, and for the most part we like it.

Or we did. Before fuel prices starting going insane.

Now there are fewer deals, and fewer airlines leading to a brand-new parlor game: Guess Which Airline Will Go Bankrupt Next? And that is leading some people to advocate a new solution to the airline woes: Dump de-regulation. Let Uncle Sam take the reins, and make Internet air travel shopping a footnote in commercial aviation history.

That is what former American Airlines CEO Bob Crandall wants to do. He was the recent subject of a Business Week piece titled, "How I'd Save the Industry" and he advocates a return to government regulation albeit in a "kindler, gentler" form where bureaucrats set airline ticket prices to assure profits for the big airlines while erecting barriers for new startups to jump into domestic air travel.