Even in the quiet of summer, aviation blogs and websites are buzzing over these two speeches. It seems those who would advocate for stronger governmental control of such a vital national asset as commercial aviation should be prepared for counter-punching from some within the industry who are eager to attribute all forms of stricter oversight to Karl Marx. But then, airline executives are quick to invoke the hymn of "let the marketplace decide." Except, of course, when they don't want the marketplace to decide.
Throughout the years, on a broad range of issues — from airport slot controls to labor settlements, bailouts to predatory pricing, code-sharing approvals to the infamous perimeter rule at Love Field Airport in Dallas — this industry's executives have been more than eager to welcome government intrusion when it works in their favor. I believe the economic term for this is "hypocrisy."
In the meantime, carriers will continue looking for alternative means of making money, from charging for checked bags to charging for sodas to inventing new charges we haven't even heard about yet. Consider that a press release making the rounds last week pointed out that credit cards co-branded with airline frequent flier programs generate more than $4 billion annually for seven of the nation's largest airlines — Alaska, American, Continental, Delta, Northwest, United, and US Airways. None of this ancillary income would seem to be enough, however, to offset the rising cost of fuel in the long run.
But in a strange paradox, a sudden decline in oil prices could provide temporary relief while only exacerbating the long-term dangers the airline industry will inevitably face. As Dan Reed noted in USA TODAY last week: "Another $10 to $15 drop in the price per barrel, which some oil experts now say is possible, will have most [U.S. airlines] back in the black. Analysts at both Morgan Stanley and JPMorgan Chase even are suggesting that the haggard industry could be profitable in 2009." Such a short-term reprieve would only delay the systemic changes America's carriers will need to implement to remain viable for years to come, particularly for an industry critically dependent on foreign oil.
Fewer seats and missing flights
In this climate, nothing can be taken for granted, and every airline seat is being judged under the harshest economic terms. When I worked for the Pan Am Shuttle — an operation that subsisted on bookings from business travelers in the busy Boston-New York-Washington corridor — our average fares were much higher than on flights of a comparable distance between other points. That was due in part to our guarantee of available seating every hour throughout the day; some flights were full, and others carried only a handful of passengers, but when all those revenues were tallied, they supported the vacant as well as the crowded airplanes.