The once-glowing financial health of America’s airline industry has been replaced by a sickly pallor as a result of the virus of deregulation. Standard & Poor’s Corp. has lowered the debt ratings of the corporations running American, United and Delta air lines to speculative or “junk” status.
What a comedown for a proud industry in the nation where powered air flight was invented. . . . Deregulation and greed are the principal factors in this state of affairs. The bond rating was based on industrywide overcapacity, uncertain demand and what S&P termed “an adverse industry environment and a narrowed competitive advantage over second-tier airlines.”
Airlines that have gone through Chapter 11 bankruptcy, such as Continental and TWA, have lowered costs, renegotiated debt and improved their competitive ability. Northwest Airlines and USAir have formed alliances with European carriers. . . .
The Big Three remain stubbornly locked in suicidal fare wars that leave passengers, travel agencies and even the airlines’ own reservations clerks in constant uncertainty. Savage price cuts are followed by sudden increases and then the cycle begins all over again.
Meanwhile, smaller cities have lost point-to-point service and are forced to make do with hub-and-spoke operations that in effect put passengers back in the aviation era of the 1930s, characterized by short hops, long waits and general inconvenience. . . .
Deregulation has not worked; the forced purchase of barrels of red ink for airline bookkeeping departments is ample proof of that. Transportation is and should be a matter of national policy. That means, first of all, providing all parts of the country with service. . . .
It means point-to-point service wherever possible rather than the failed hub-and-spoke policy. And it means re-regulation of air service by a rejuvenated federal agency which is able to balance both the travel needs of passengers and the financial needs of the airline industry.
