BY THE DREARY STANDARDS of America's airlines, things are looking up. The six biggest carriers cut their 2002 losses of $7.4 billion to a mere $5.3 billion last year, and some may actually be in the black this year--if we ignore pension obligations. United Airlines remains a bankrupt, US Air recently emerged from bankruptcy but is again chalking up large losses, and Delta reports that a cash hemorrhage has left it with a balance sheet "severely damaged to the point of exhaustion." Its management is asking the pilots to cut their pay by 30 percent; the pilots reply that their contract guarantees them a 4.5 percent raise next month.
Things in the international market are a bit cheerier. Traffic at the seven U.K. airports run by BAA (formerly British Airports Authority) in March was up 10 percent on the war-depressed, year-earlier total. The same was true at other airports around Europe. So some European carriers have moved from the intensive care unit into the wards, and others have been discharged from the hospital with a warning to change their lifestyles so as to avoid readmission.
But the industry's ailments are not entirely of its own making. Standing between many of the airlines and a return to robust health are governments that can't resist interfering in these markets. And when there is a role for government, as may be the case with antiterrorist procedures, it is often performed badly.
OUR ANTI-TERRORISM LAW requires foreign airlines to supply data on passengers when they
begin their journeys, so that our Homeland Security forces can properly greet anyone who might have an advanced degree in bomb-making from one of the institutions that abound in Afghanistan and, it seems, in parts of London. Despite the facts that most passengers would prefer to know that they are not seated next to some potential hijacker--and although many airlines have been exchanging such data for years--the E.U. parliament is considering going to court to prevent these data exchanges. We have warned them that if they prevail, they shouldn't count on our allowing their planes to land at our airports. That bit of E.U. nonsense would cost private sector carriers dear.
That is only one instance of governments making life difficult for airlines. More important is the tendency to bail out their national carriers when poor management and truculent trade unions produce years of loss-making. Here in America, the bankruptcy laws allow firms such as United, famed for a succession of inept managers and a work force that refuses to recognize the new competitive pressures operating in American markets, keeps flying because the courts allow it to do so.
In Europe, governments seem determined to keep their national flag carriers in the air at all costs. The Italian government canned the CEO of Alitalia when he had the temerity to suggest cuts in manning levels to reduce the carrier's losses. Politicians were stunned that anyone would suggest staff reductions so close to an election. That means that privately-owned airlines such as British Airways are often forced to compete with state-owned airlines that are held harmless from management inefficiency, overmanning, and uneconomic wage settlements.
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