Jetrader - May/June 2009 - 12

Tough Talk I This year, ISTAT honored Robert L. Crandall—chairman and CEO of American Airlines from 1985-1998 and current chairman and CEO of POGO—by bestowing the ISTAT Award upon him at the 26th Annual Conference. His speech, highlights of which are reprinted here, offered an honest look at the current state of the industry, while also giving several suggestions for improvement. t would be nice if this were taking place in more settled economic times. Unhappily, as we all know, our country is in either a recession or a depression—depending on your point of view—and the prospects for near-term improvement seem less than promising. The new administration is struggling to revive the economy while grappling with a daunting array of problems including underfunded social security and Medicare systems, a dysfunctional ﬁnance and banking system, an underperforming health care system, a deteriorating national infrastructure, a failing educational system, burgeoning national debt, a dysfunctional political system and many others. Not surprisingly, the depth and range of our problems has generated a widely diverse set of proposed solutions and intense debate about the propriety, efﬁcacy and long-term implications of the government’s proposals. In this debate, it’s easy for policy makers to overlook the implications of not addressing some of the problems that seem less immediate than others. One that is getting no particular attention and deserves more is the steadily deteriorating state of our commercial aviation system. It’s hard to know why that problem seems to attract so little attention. Maybe it’s because people are used to awful headlines about the airlines. On the day I walked into American Airlines in April 1973, Don Lloyd-Jones, then the V.P. of operations for the airline, met me in the hall and asked if I knew what a mess I was getting into. Having come from TWA, I did—and in the years since, the industry has lurched from crisis to crisis, occasionally enjoying a few years of proﬁtability, but never ﬁnding a basis on which to run anything resembling a normal commercial enterprise. What other industry in America has lost $30-billion-plus during its lifetime and routinely fails to earn its cost of capital? And what other business is beset, daily, by hundreds of newspaper and television tales of labor conﬂict, consumer discontent and continuing ﬁnancial losses? It’s hard to believe that a business as complex, exciting, interesting, diverse and important to society can be in such a sad state. The long-term implications of an inadequate transportation system are profound; travel and tourism provide more than one million jobs in many industries in every part of America and generates more than $1 trillion of economic value. Transport is essential to the ﬂow of goods, as well as people, and the ability to move around the country is easily as essential to sustaining commerce as the availability of credit. In my view, reversing the long decline of our aviation system will require public policies designed to improve the ﬁnancial and operating results of U.S. airlines, with the objective of restoring both our international competitiveness and the vigor of the U.S. domestic network. As many of you know, I have long believed that airlines cannot—and will not—operate successfully if treated like just another business. I think transportation services are very much like utility services, and need the helping hand of government. If we want better results, policy makers should be considering things like: • Promptly providing the funding needed for the earliest possible installation of a new, GPS-based airtrafﬁc control network • Creating a private-sector airspace management organization • Imposing ﬂight frequency limitations at overscheduled airports to improve the industry’s on-time performance • Revising FAA regulations to prevent U.S. carriers from accomplishing maintenance in offshore facilities • Modifying U.S. labor laws to overcome the industry’s chronically adversarial labor/management relation • Revoking aviation alliances, which limit the competitive opportunities available to U.S. carriers or provide disproportionate advantages to foreign carriers I am aware that these suggestions are too regulatory for many tastes and are also regarded as incompatible with the widely sought ideal of the lowest possible price for every consumer. Nonetheless, since existing public policy has produced little for any of us to be pleased about, I thought I should take the opportunity to offer some alternative to the apparent alternative of still less service and more and more service fees. Thanks again for your recognition. Let’s all pray for better times ahead. 12 The ofﬁcial publication of the International Society of Transport Aircraft Trading

Jetrader - May/June 2009

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