"These days no one can make money on the goddamn airline business. The economics represent sheer hell.
— C. R. Smith, President of American Airlines
My email box was abuzz this afternoon after former American Airlines Chairman and CEO Bob Crandall called for re-regulation of the airlines in remarks before the Wings Club yesterday.
Decrying the “sad state” of U.S. commercial aviation, Crandall declared three decades of deregulation a failure and said that treating airlines like a regulated utility must be a part of a broad solution to their current financial crisis, which we covered in the June 11 issue (subscribers only) of Aviation Daily.
“We have failed to confront the reality that unfettered competition just doesn’t work very well in certain industries, as aptly demonstrated by our airline experience and by the adverse outcomes associated with various state efforts to deregulate electricity rates,” Crandall said. “It’s time to acknowledge that airlines look and are more like utilities than ordinary businesses.”
I don't know why everyone is so surprised that Crandall is calling for re-regulation. If you read your aviation history, you'd know that he was one of the industry's leading opponents to the Aviation Deregulation Act of 1978.
I did a search of Crandall quotes on the Great Aviation Quotes web site, and here's what he said about deregulation at a Senate hearing on the matter in 1978 (and please excuse the language):
"You fucking academic eggheads! You don't know shit. You can't deregulate this industry. You're going to wreck it. You don't know a goddam thing!"
When he realized that deregulation was coming, Crandall decided to play the hand that he was dealt and never looked back. But he ended his speech by warning that industry regulation alone won't be enough to rescue the commercial air transportation industry.
Also needed is a national transportation plan of U.S. aviation goals, including a comprehensive redesign of the air traffic control system. “Unhappily,” Crandall added, “such a plan does not exist.”