A RANT ON THE NATURE OF THINGS
By Joe Brancatelli
April 3, 2008 -- We are now 94 days into the year and we have already lost a half-dozen U.S. carriers. Aloha and ATA stopped flying earlier this week. Skyway, a commuter carrier owned by Midwest Airlines, goes down on Saturday. Big Sky, the commuter line, died in January. Pan Am Clipper, the awful little airline with the once-important name, stopped flying scheduled service in February. And come May 31 we say goodbye to Champion Air, a charter company that is the distant descendant of MGM Grand Air, the darling of luxury transcontinental travel 20 years ago.
The attrition rate has been even higher overseas: AlpiEagles of Italy pulled the plug on New Year's Day, followed by Aero of Estonia, CityStar of Scotland, Coast Air of Norway and Adam Air of Indonesia. GB Airways of Britain, JAA of Japan, FlyNordic of Norway and Freedom Air of New Zealand have all been folded into other airlines.
And, wait, we're not done. Skybus, that dreadful $10-a-seat, charge-extra-for-the-air-in-the-cabin airline, seems doomed. (Its founder quit abruptly last month, claiming he wanted to go back to his book-writing career.) Virgin America looks shaky. (If it isn't desperate for cash, what's it doing selling $123 coast-to-coast tickets with oil at $100 a barrel?) And Alitalia, bless its hopeless little corporate heart, seems headed for a unique form of Italian bankruptcy now that Air France has gone back to Paris and the chief executive of the month quit last night. (An update on Saturday, April 5, 9 a.m. ET: Skybus folded last night.)
I could go on, but I think you get the point: Airlines are dying. And I'm cool with that. It's called the circle of life or the nature of things or the business cycle. (I get my axioms from financial primers, philosophy tracts and Disney movies mixed up sometime…)
Don't be afraid, fellow travelers. The only thing we have to fear is the government getting in the way and letting itself be buffaloed into giving more of our tax dollars to private companies in the guise of the "national interest." Actually, come to think of it, we have a second thing to fear: Hasty mergers that would help no one but the corporate barbarians who have structured their contracts for big payouts when they let their carriers get bought out.
Let the weak airlines die and the marketplace work. Let the stronger carriers feast on the corporate remains. And let the fat-cat bosses of failed airlines strangle on the ripcords of their golden parachutes.
No bailouts. No mergers. No tax breaks. No emergency aid. No Bear Stearns-like, they're-too-big-to-fail, we-have-to-save-the-system baloney.
It's springtime in America. Time for a fresh new crop of airlines to grow and the sturdy perennials to flower with the aid of the succor provided by the death of last year's crop.
Now, look, I know such a hard-core, let-the-market-work, unfettered-capitalist stance is going to cause pain. You and I are going to be inconvenienced. Our fares may go up and some of our perks and frequent flyer miles will be lost. Thousands, maybe tens of thousands, of hard-working airline employees are going to lose their jobs. Cities and airports are going to get screwed.
Frankly, it can't be helped. More to the point, though, we know the other way--bailouts, mergers, sweetheart deals--is at least as painful for all concerned
What did we get for the $5 billion check we wrote to the airlines after 9/11? Nothing. And in at least one case, the owners of an airline looted its carrier's share of the bailout. What did we get for letting American "save" the failing TWA? Nothing. And almost no jobs were saved. What did we get for letting US Airways and America West merge? Nothing and no one laid a glove on Steve Wolf, Bill Franke and the other creeps who raided those carriers' treasuries in past years.
Do you want to talk to the folks in St. Louis who ponied up for a new runway and hundreds of million of improvements to Lambert only to watch American close the old TWA hub? How do you think taxpayers in Pittsburgh feel now that at least two crops of US Airways management pulled service from the city's nifty airport?
Want to talk to the folks in Denver or a half-dozen other cities who were left holding a financial bag of poo when their hub airline went bankrupt and skipped out on everything from gate fees to maintenance bases? Or call some of the good burghers in Minnesota who've bent over in several directions during the last 20 years to keep Northwest Airlines headquartered in the state. Northwest management had done everything except disconnect the corporate coffee machine when the Delta merger van briefly stopped at the back door earlier this year. Northwest was a red streak headed to Atlanta.
Mark today in your PDA. Three months from now or six months from now the Big Six will come knocking at our collective door again. They will cry poverty, wrap themselves in the flag and raise the specter of massive service disruptions and horrific layoffs if we don't let them merge or give them money so they can prop up their rotting, sinking ships.
I say just let the market work. If they die, they die. Southwest is there. JetBlue is there. Other airlines will be born.
That is the nature of things. Or, at least, it should be.
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
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