The air traffic controllers strike has had the unexpected effect of temporarily re-regulating commercial aviation by making it tough for airlines old and new to gain access to major airports they do not already serve.
That new re-regulation comes because the Federal Aviation Administration has been forced to reduce flights at major airports so supervisors and nonstriking controllers can handle the traffic, a situation that is expected to continue for many months.
The adverse effect on competition will mean higher fares for passengers and reduced availability of discount and super-saver plans, airline analysts and executives say. Both United Airlines and Trans World Airlines have already announced new restrictions and higher fares for transcontinental super-savers, although they lowered coach and first-class ticket prices. The clear intention, analysts say, is to make it difficult for the business traveler to find a discount.
While much early attention has been placed on the thousands of airline employes laid off because of reduced flights, the overall situation is seen by some as a long-term benefit to the major trunk lines because it gives them excuses they otherwise would not have to pare down, trim losing services and raise fares.
Robert J. Joedicke, an analyst with Lehman Brothers Kuhn Loeb, said, "If the strike goes away tomorrow, I doubt very much if most of the carriers would put back traffic to the prestrike levels. I think the strike is the catalyst to cause the carriers to do what they already should have done."
Daniel F. May, chief executive officer of Republic Airlines, agrees. "I think you'll see a lot of discount fares eliminated . . . . Passengers have been benefiting at the expense of the airlines, and a number of airlines are already in serious trouble. Deregulation has been good for the customer, but not for the airlines."
Clark Onstad, former chief counsel of the Federal Aviation Administration who now represents several airlines, said it is his view that "at the end of the capacity-control process, the major incumbent carriers will be slimmed down to where they will be in much better shape to compete with the Columbia Airs, the Air Chicagos, the Midways and the New York Airs. . . . They have gotten some breathing room."
The access problem is restricted primarily to the big cities. Many of the regional airlines, such as Piedmont and Air Florida, are running well over 90 percent of their normal schedule because they serve smaller, outlying airports where a couple of air traffic control supervisors can easily handle the load. "We carried more people this August than we did last August," a Piedmont official said.
But airports such as LaGuardia are handling no more than 50 percent of their usual load, and that means everybody has to cut back their schedules. Thus, the crunch comes at the airports everybody wants most to use. "Sure the strike's going to hurt us," said American Airlines spokesman Art Jackson. "But we're going to make money. It's a question of whether you'd rather make $50 or $100."
Eastern Airlines, which has found itself in heavy competitive situations with airlines such as Air Florida and New York Air, is concentrating on improving productivity during this period. AIRLINES, From G1 Frank Borman, Eastern's chief executive, told his employes that "the guys who used to feed us are now feeding on us."
United Airlines, under heavy pressure from regional airlines in several markets, was able to negotiate an unheard-of contract with the Air Line Pilots Association in which the pilots agreed to fly Boeing 737s with two crew members instead of three, something that Piedmont has been doing for years.
That will make United much more competitive on the short-haul routes that the regional carriers have been picking off. But meanwhile, with the FAA regulating airport access, there are two other United stories worth telling:
United once charged $135 for a flight from New York to Cleveland. New York Air entered the market with a $79 base fare and a $59 off-peak fare. United matched it. New York Air dropped to $59-$39; United matched it. Since the strike, with the ability to increase service denied to both New York Air and United, United announced it will raise its fares $10. Why, United's Marden Leaver was asked. The New York-Cleveland service, he said, "has been very successful; it has a very high load factor." In other words, United thinks the traffic will bear the increase.
West Air Jet Inc., which wants to call itself Pacific Express but has been forced into court over the use of that name, announced before the strike it would operate 12 round-trip cut-rate flights a day between Los Angeles and San Francisco. United, which already has 17 flights a day in that market, announced it was going to enter the low-cost, no-frills competition there, too. The strike arrives. West Air Jet is told by the FAA that the most flights it can have per day is nine; United has decided to delay, at least for a while, implementing cut-rate service, even though it has slots at both Los Angeles and San Francisco it could use to do so. Leaver said the United decision to delay is in no way related to West Air's problems. "We hope to get into low-cost, high-density flying soon," he said, "but in addition to the present service."
What has happened was not anticipated by Federal Aviation Administration officials in their early planning for a presumed controllers strike. The FAA, charged only with regulating aviation safety, is in effect regulating aviation economics, and those airlines that are already in the game find themselves with certain advantageous rights. That is the kind of situation the Civil Aeronautics Board used to protect but has been moving away from as it goes out of business.
Airlines already serving a specific airport are free under the FAA's flow-control rules to choose which routes they will serve and which ones they will cancel. In that circumstance, however, they are reluctant to take a precious "slot" away from a proven route and give it to a new venture. Thus, the downward pressure on fares that an airline brings when it offers new competition on an established route is gone.
Federal Aviation Administration officials insist that they are making room in their flow-control rules for "new entrants," assuming those new entrants had announced their intentions before the strike began. But it isn't easy.
Midway Airlines, the Chicago-based carrier, is taking delivery in the next few months on eight more airplanes and plans several new, unannounced service expansions plus one major announced increase: three cut-rate flights a day between Boston and Chicago's Midway Airport, starting Dec. 16. It is difficult to get new access to Boston and Chicago.
Gordon Linkon, president of Midway, explained the situation. "We keep talking to the FAA," he said, "and ask them, 'How about this?' They say, 'We'll let you know later.' Meanwhile, we're going forward as if it's been approved; no one's said no. . . . But I can't start up service and not tell the world and not do some advertising; so we're sitting with high hopes and confidence, but some nervousness."
Republic Airlines, according to May, was planning "a couple of new routes into New York," but now can't get the slots because it had not announced its intentions before the strike. Whatever those routes were -- May isn't saying -- will not have the benefit of Republic competition.
New York Air was unable to start its New York-Louisville service out of LaGuardia because the strike came just as the service was to start. So New York Air moved its Louisville flights from LaGuardia to Newark and postponed, at least for a while, plans to start LaGuardia-Detroit service.
"We hear that American is going to leave LaGuardia-Buffalo to USAir," said Neal Meehan, president and general manager of New York Air. "We would love to run five trips a day between LaGuardia and Buffalo, but because of the controllers situation" the slots will not be available.
Edwin I. Colodny, USAir's president and chairman, said that in his view the impact of the controllers strike on airline competition will be temporary. "It may shape the timing of the changes the various carriers have in mind," he said, but he expects most of the changes to take place eventually.
"The government says it will try to preserve room for new entrants," Colodny said. "But it will be tougher for those who are trying to raise money" for airplanes if they are having trouble getting into airports. "Frankly," said Colodny, "that's the way it should be. You don't have an ideal competitive situation in a system that can't accommodate competition."
The New York problem is the most worrisome and the one that will probably take the longest to solve. It is the prime market for the airlines and it has five critical air traffic control facilities: towers at LaGuardia, Kennedy and Newark, a combined radar room that handles approaches and departures to all three of those airports, and a regional center that has substantial international as well as domestic responsibilities.
The Professional Air Traffic Controllers Organization locals were very strong in all those facilities; almost all the controllers went out and stayed out. There is no way the FAA can retrain new personnel for those towers in weeks; it will take months, maybe even two years to get back to full capacity. The big airlines, with more large planes, are better able to take advantage than the small ones. Eastern, for example, has lost some slots between LaGuardia and Boston for that leg of its shuttle, so it has simply put on four jumbo-jet A300s. New York Air is stuck with fewer flights and its smaller DC9s.
A similar situation exists in Chicago, but airlines are already figuring out how to work their connecting flights through places such as Milwaukee and Detroit, where the control situation is less severe.
In Washington, National Airport tower chief Harry Hubbard said he can handle all the traffic the rest of the system has been able to deliver to him. "We haven't had any delays because of problems here," Hubbard said. That doesn't mean, however, that people won't spend time sitting on the ground at National. FAA's flow control won't let their flights take off until they can get a direct no-holding-pattern route all the way to their destination.
The brightest picture is on the West Coast. Fewer controllers struck and weather does not usually present the control problems that it does in the Northeast.
"New entrants are at least being allowed to get their foot in the door," said analyst Joedicke. "But the strike will make it difficult for some of them to grow unless they can find some other markets."