Robert Crandall, the former chairman of American Airlines and a significant voice in the US airline world, is calling for re-regulation of the industry.
In a mid-June speech delivered to the Wings Club in New York, Crandall said: "Three decades of deregulation have demonstrated that airlines have special characteristics incompatible with a completely unregulated environment."
He suggests that airlines be forced to charge fares that add up the legs of a trip, an idea that would penalise connecting hubs like the big ones he championed at Dallas/Fort Worth or Chicago O'Hare.
For instance, if an airline charges $200 to fly from Albuquerque to DFW and $400 to fly from DFW to New York, it would have to charge $600 to fly from Albuquerque to New York through DFW.
"To my mind, a 'sum of the locals' rule would likely reduce the ability and motivation of airlines to preserve connecting complexes now being sustained by operating small, relatively inefficient aircraft, or by pricing connecting itineraries far below actual costs or - in far too many cases - doing both," he says.
Crandall claims his proposal is less intrusive than full pricing regulation and is needed "for government to help the industry achieve compensatory pricing while simultaneously responding to the increasingly pressing need to increase the industry's fuel efficiency".
He also urges, as he has in the past, reform of the bankruptcy laws to prevent quick trips in and out of reorganisation.
Crandall proposes exemptions to the US antitrust laws to allow more industry collaboration to "achieve more intensive asset utilisation and more efficient operations".
That dovetails with Crandall's suggestion that airlines use government auspices "to reduce present schedules proportionally to each carrier's present frequency share. Doing so would create pressure to use the largest feasible aircraft in each slot."
He also urges reform of the labour laws to incorporate binding arbitration. Crandall has suggested this reform in the past and a bill to achieve this was in fact introduced in the Senate several years ago but it failed.
Crandall says it "seems likely that the threat of binding arbitration would encourage both labour and management to adopt more moderate positions than has been true in the past, while simultaneously moving all airlines closer to labour cost parity".
While some on Capitol Hill have said they regret their support of deregulation in 1978, Crandall's proposals are the most detailed yet.
Source: Airline Business
