BTC today called for Congress to authorize the National Academy of Sciences Transportation Research Board to vet policy options that could be considered in the event of an airline industry collapse.
January 12, 2005 (Press Release) --
The Business Travel Coalition (BTC) today reiterated its call for the U.S. DOT to recommend, and Congress to authorize, the National Academy of Sciences Transportation Research Board (TRB) to vet policy options that could be considered in the event of an airline industry collapse. BTC likewise called for the TRB to put forth recommendations, within a framework of a national air transportation policy, to more fully deregulate the industry for the purpose of enabling greater airline efficiencies.
BTC chairman Kevin Mitchell stated, “No mass transportation system in the history of mankind has been profitable over time. The low cost U.S. airline segment is meeting customer needs, is profitable and is growing. However, the major network airline segment, which comprises the major portion of a critical infrastructure upon which virtually every other industry depends, is in a state of deepening crisis.”
Today, failing firms represent seventy-five percent of U.S. airline capacity; hundreds of thousands of airline employees have lost jobs, or are working longer hours for reduced pay and benefits. At this point in the U.S. economic expansion, airlines should be topping off their coffers and repairing balance sheets. Instead, major network airlines are facing a fifth straight year of multi-billion dollar losses.
Twenty-five years after deregulation, the U.S. still does not have a unified national air transportation policy. Strategic planning should not be confused with national policy. For example, Congress has never adequately addressed the question of what socio-economic outcomes it seeks from the national air transportation system despite U.S. DOT strategic plans going out to the year 2025.
Of concern is a growing prospect that the U.S. airline industry will experience major network airline failures during the next 12 months. Such a potential scenario suggests the need for proactive development of public policy choices to avoid imprudent and hastily made government decisions in the event of such a crisis.
Eventually the marketplace would fill voids left by the failed firms. The danger, however, is that the government could be caught off guard, as it was post 911, without well-conceived contingency plans and policy options. Pressure for a bailout would come from airlines, unions, communities and other stakeholders with parochial interests. There would be enormous demands on Congress to act. It would be highly desirable for Congress to have sound proposals to consider before a calamity and thus avoid long-term, market-distorting policy choices, according to BTC.
BTC strongly favors free market principles and believes the yet unrealized promises and benefits of airline deregulation lie just ahead. The silver lining for legacy network airline workers during these very difficult times is renewed growth and job security should their firms competently respond to a permanently changed marketplace. Theirs is an industry segment in deep trouble, but one largely protected from having its production and jobs outsourced overseas.
The U.S. airline industry, in BTC’s view, can cheat history of its fate and emerge from this crucible as a mass transportation system that can generate sustainable profits over time. Major network airlines of course have the primary responsibility for reconfiguring their business models and rebuilding employee and customer trust.
The federal government, however, has the responsibility of 1) doing no harm during this protracted and gut-wrenching crisis, 2) developing contingency plans in the event of a catastrophic collapse of the industry and 3) crafting a national air transportation policy which properly establishes priorities and appropriately further deregulates the industry.
---
Additional analysis at askBTE. (http://btcweb.biz/btepiece.pdf)
CONTACT׃ Kevin Mitchell (BTC)
610.341.1850
btcmitchell@comcast.net
Founded in 1994, the mission of the Business Travel Coalition is to lower the long-term cost structure of business travel. BTC seeks to bring transparency to industry and government policies and practices so that customers can influence issues of strategic importance to them. Learn more about BTC at http://btcweb.biz/.
BTC chairman Kevin Mitchell stated, “No mass transportation system in the history of mankind has been profitable over time. The low cost U.S. airline segment is meeting customer needs, is profitable and is growing. However, the major network airline segment, which comprises the major portion of a critical infrastructure upon which virtually every other industry depends, is in a state of deepening crisis.”
Today, failing firms represent seventy-five percent of U.S. airline capacity; hundreds of thousands of airline employees have lost jobs, or are working longer hours for reduced pay and benefits. At this point in the U.S. economic expansion, airlines should be topping off their coffers and repairing balance sheets. Instead, major network airlines are facing a fifth straight year of multi-billion dollar losses.
Twenty-five years after deregulation, the U.S. still does not have a unified national air transportation policy. Strategic planning should not be confused with national policy. For example, Congress has never adequately addressed the question of what socio-economic outcomes it seeks from the national air transportation system despite U.S. DOT strategic plans going out to the year 2025.
Of concern is a growing prospect that the U.S. airline industry will experience major network airline failures during the next 12 months. Such a potential scenario suggests the need for proactive development of public policy choices to avoid imprudent and hastily made government decisions in the event of such a crisis.
Eventually the marketplace would fill voids left by the failed firms. The danger, however, is that the government could be caught off guard, as it was post 911, without well-conceived contingency plans and policy options. Pressure for a bailout would come from airlines, unions, communities and other stakeholders with parochial interests. There would be enormous demands on Congress to act. It would be highly desirable for Congress to have sound proposals to consider before a calamity and thus avoid long-term, market-distorting policy choices, according to BTC.
BTC strongly favors free market principles and believes the yet unrealized promises and benefits of airline deregulation lie just ahead. The silver lining for legacy network airline workers during these very difficult times is renewed growth and job security should their firms competently respond to a permanently changed marketplace. Theirs is an industry segment in deep trouble, but one largely protected from having its production and jobs outsourced overseas.
The U.S. airline industry, in BTC’s view, can cheat history of its fate and emerge from this crucible as a mass transportation system that can generate sustainable profits over time. Major network airlines of course have the primary responsibility for reconfiguring their business models and rebuilding employee and customer trust.
The federal government, however, has the responsibility of 1) doing no harm during this protracted and gut-wrenching crisis, 2) developing contingency plans in the event of a catastrophic collapse of the industry and 3) crafting a national air transportation policy which properly establishes priorities and appropriately further deregulates the industry.
---
Additional analysis at askBTE. (http://btcweb.biz/btepiece.pdf)
CONTACT׃ Kevin Mitchell (BTC)
610.341.1850
btcmitchell@comcast.net
Founded in 1994, the mission of the Business Travel Coalition is to lower the long-term cost structure of business travel. BTC seeks to bring transparency to industry and government policies and practices so that customers can influence issues of strategic importance to them. Learn more about BTC at http://btcweb.biz/.
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