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RAPID DESCENT by Barbara Sturken Peterson

RAPID DESCENT

Deregulation and the Shakeout in the Airlines

By Barbara Sturken Peterson (Author) , James Glab (Author)

Pub Date: May 6th, 1994
ISBN: 0-671-76069-6
Publisher: Simon & Schuster

 A somber assessment of how US airlines have gotten along since their mid-1970s deregulation, by two trade journalists who fear the industry may be in for recurrent Sturm and Drang. In most important respects, Peterson and Glab conclude, the benefits expected to follow removal of federal controls have been no-shows. While new carriers emerged to vie with the old, they note, precious few mounted successful challenges, and a small flock of established enterprises (American, Delta, Northwest, United, et al.) still rules the domestic air-travel roost. Owing to ruinous fare/route rivalries, costly takeover battles, ill-advised mergers, adversarial labor relations, and allied woes, the authors point out that most of the survivors are flying on empty from a financial standpoint. In the meantime, generally lower ticket prices have greatly expanded the air-travel market, but new passengers and old find themselves herded through hub terminals ``that do to humans what postal sorting centers do to our mail.'' Peterson and Glab focus on the individuals who have played high-profile roles in commercial aviation's dramatic fall from grace. Cases in point range from Donald Burr (founder of People Express) through Robert Crandall (American's innovative albeit frustrated CEO), Carl Icahn (a Wall Street raider bloodied by his close encounters with TWA), and Frank Lorenzo (the sometime head of Continental, whose resourceful use of bankruptcy law earned him the enduring enmity of unions). The authors fault the US government for countenancing ``blatant cases of anti-competitive behavior,'' in particular those involving computer-based reservation systems and predatory pricing that helped ground fledgling carriers. Without advocating revival of CAB-like oversight, they leave no doubt that the public interest demands that laissez-faire's imperfect performance be addressed before the airlines embark on another self-destructive cycle. A consistently absorbing and informed briefing on the negative socioeconomic consequences that can accrue from the best of intentions. (16 pages of photos)