"We used to have a beautiful (airlines) system," said Gordon Autry, president of Rocky Mountain Airways. "We could fly twice as far as they could in Europe for half the price -- before they ruined it." The principal villain, he suggests, is too much deregulation too quick, leading to a competitively disastrous "free-for-all."
Autry is one of a disappearing breed -- an experienced pilot turned aviation executive who is still having a great romance with flying. Rocky Mountain, operating out of the Denver airport, is one of the large (and successful) regional airlines, providing commuter service in several Western states with new short take-off and landing aircraft.
Public discussion about the airlines' economic troubles is a subject usually verboten among airline corporate officials, second as a no-no only to public chatter about airline safety. But Autry talked candidly about the economic outlook -- except for naming names among airlines in trouble. He's especially critical of government deregulators who, he says, are primarily responsible for the desperate straits of the airlines industry -- and of Congress, of letting a disastrous situation continue.
His diagnosis is this: airlines, left more and more to their own devices by the Civil Aeronautics Board, have boosted fares where they have no competition, forcing the public to pay whatever the traffic will bear. And where there is competition for business, the strong lines have been able to run others into the ground with predatory fare cuts.
The recession has, of course, made things worse: passenger traffic is way down, earnings are way off, and the financial markets are rife with rumors of impending bankruptcies. At a time of stock market boom, many airline stocks languish near all-time lows. "Demand for new equipment is almost totally deferred," Autry said sadly, as we flew into Stapleton International Airport here. And troubled airlines looking for emergency cash "can't even give their planes away these days."
On Wall Street, there is considerable worry about the future of Pan American Airways -- in many ways, the pionner line of the entire aviation industry. To help the balance sheet, Pan Am has had to sell off a profitable hotel chain as well as its New York skyscraper. Analysts think 1983 could be the critical year for Pan Am and the industry.
In the recent past, Braniff, Air West, Southern, National, and North Central Airlines have disappeared or been gobbled up by other carriers. Industry insiders say that the current danger list, in addition to Pan Am, includes Western, Texas Air, Air Florida, Republic and World Airlines.
In a desperate effort to "be one of the few survivors," Autry points out, many of the large carriers have initiated a new wave of air fare "bargains," something that can be done in the present deregulated atmosphere. The dog-eat-dog result, Autry believes, will be a tremendous attrition among the airlines over the next 10 years.
By 1990-91, he suggests, all that will be left will be five or six large carriers operating out of major "hubs," or metropolitan areas -- perhaps Denver, Atlanta, St. Louis, Chicago, New York and Los Angeles. And of the more than 300 regional lines like his own, only some 30 to 50 might remain as "feeders" into these hubs.
"I believe it's going to happen this way -- how long can Congress sit and watch?" he asks.
An expert at photogrammetry, a pilot since 1955 and boss of Rocky Mountain or its predecessor companies since 1963, Autry points out that back in 1959, when he first got into corporate aviation, only 16 percent of the U.S. population had ever taken a commercial flight. Now, an estimated 70 percent have flown. And as airlines replaced the railroads as the nation's basic means of passenger transportation, the scope of government regulation mushroomed.
The assumption going back to the initial regulatory law, the Civil Aviation Act of 1938, was that the airline industry needed "a careful, systematic guideline premised on need and some kind of economic sense," Autry says. But in the past 15 years or so, "the CAB began telling the managers of carriers (how to operate) beyond the basic economic (framework) of the regulation."
So he acknowledges that there may have been a case for getting rid of some regulatory excesses. But Autry deeply believes that deregulators like former CAB boss Alfred Kahn (and his successors in the Reagan administration) have gone too far. "We took an industry that has been regulated for some degree for about 50 years, and heavily regulated for 40 years, and virtually overnight thrust it into a total free-for-all."
Autry says that he approves junking non-economic regulations -- such as control of nonsmoking areas (better left, he says, to each airline to handle). "The first thing I would do now," he says, "is to put regulation of air fares back in place. You have to eliminate predatory pricing. By bleeding the next fellow (through fare cuts), the result is a total drain of (airline) liquidity." Then, he would restore some formal system of "route application and expansion."
Autry makes good sense, in shining contrast to the Adam Smith purists who in their ideological commitment to deregulation would throw the baby out with the bath. What are the chances for common sense to prevail over those who have never had to meet an airline payroll? The cynics in Washington think that Congress won't acknowledge the virtues of re-regulating until there's a major economic disaster. Maybe Pan Am going belly-up would do it.