ONE OF THESE BOOKS, The Sporty Game, is
about the business of building airliners. The other, The Chosen Instrument, is about the business of flying passengers in them around the world. Both businesses are exciting and romantic, and until recently, they had the additional benefit of being profitable as well. But that's changed.
The decline of aircraft manufacturers and airlines has several causes: the rise in the price of fuel; the on-and-off recession of the '70s and '80s, and some expensive decisions that turned out to be mistakes -- like developing wide-bodied jets before there was any real demand for them. But the major theme of both books is that the airplane business has been most wounded by too much competition and not enough government protection.
John Newhouse, author of The Sporty Game, quotes the head of Pratt & Whitney, the jet-engine manufacturer, as saying: "Competition is wonderful, but masochistic industrial self-destruction is quite another thing . . . and this industry may be poising itself to do just that."
To those of us who are enamored of the symmetry of free-market economics and the joy of swashbuckling capitalism, this message is disillusioning. In The Chosen Instrument, a history of Pan American Airways and its founder Juan Trippe, for example, we learn that mighty Pan Am was born and raised on government subsidies and began to decline shortly after they diminished.
Authors Marilyn Bender, a former New York Times reporter, and her husband Selig Altschul, a business consultant, depict Trippe not as a bold and creative entrepreneur but as a secretive and mean-spirited boss ("the politest and least compassionate man I have ever known," said a colleague; a "Yale gangster," said Franklin D. Roosevelt) who got his airline started with the money of rich, bored classmates like Sonny Whitney and with government contracts to carry the mail, secured through an Old Boy network. It is not an inspiring tale.
Trippe's greatest coup, appropriately, was not in the air but in real estate: his company turned a profit of $294 million in 1980 (almost making up for the deficit of the preceding decade) by selling the Pan Am building in midtown New York. That big, ugly, obstructing edifice is a fitting symbol for the personality of Trippe himself.
Trippe was a poor manager, but he had one thing going for him -- a singleminded vision of Pan Am as the "chosen instrument" of U.S. aviation policy, as the quasi-official agent of the government, spreading American power around the world. For the first two decades after Pan Am's founding in 1927, Trippe was largely successful, creating the impression, especially in Latin America and Asia, that Pan Am was the U.S. government's surrogate. But, in the end, he failed, partly because he was greedy and abrasive and partly because Franklin Roosevelt believed more in the free market than Juan Trippe did. Said Roosevelt in 1943: "Certain companies -- and I'm going to speak frankly: Pan American -- want all the business. They've done a good job in the war, and maybe that entitles them to a senior place. But Juan Trippe cannot have it all."
Twenty-six years later, with Trippe retired, Pan Am chairman Najeeb Halaby described the company as being "locked in a shrinking box, with top, bottom, and sides all closing in at once."
Bender and Altschul explain: "Everyone agreed with his diagnosis of the ailment. The symptoms were manifest: a reputation for arrogance, ascribed to poor service aboard the aircraft and to a political legend that reaped vengence from the C.A.B. and the White House in the form of a surfeit of competition for Pan Am. Its 81,430-mile route system was overextended -- the product of one man's vision of the airline as the carrier of national interest abroad. To believe that Pan Am had to serve Moscow and Pago Pago because it was Pan Am was an illusion of grandeur that could not be sustained without government subsidy or a monopoly of lucrative markets to compensate for the losses on these lines."
This morality play -- with a tragic ending soon to come --is told clearly and well by the authors. But there's a lack of emotion in the story, probably a reflection of Trippe's own Nixonesque personality, but it's hard to believe that it pervades the whole history of the company. One longs for quirkiness, finding it occasionally in the author's descriptions of characters like Sonny Whitney and Charles Lindbergh, who sat on Pan Am's board and served on and off as a consultant. When Lindbergh started working again for Pan Am in 1953, he refused to be paid. He finally wrote Trippe: "As far as salary is concerned, as I have said before, the less the better from my standpoint. I don't like to live elaborately, and I have all the income I want from my writing and investments."
Clearly, the companies that make airliners don't have all the income they want. And as a result of 30 years of competition building passenger jets, only one strong domestic firm remains, Boeing. And Boeing faces severe competition from Airbus Industries, a consortium whose partners are the governments of West Germany, France, and Britain. And competition from Japan is on the way.
In the final chapter of The Sporty Game (the term "sporty" in this business means daring), Newhouse argues that there is little hope for the aircraft industry in the Reagan administration's policy of deregulation and of removing government support: "The flaw, or one of the flaws, in merely 'reprivatizing,' as some of (Donald) Regan's associates call it, is that other countries that matter won't play the game." U.S. companies now "have to compete in their own home market, as well as abroad, against companies that benefit from strong and affirmative government support. The world has moved on since the time of Andrew Mellon, when the American market was indeed a sanctuary and well-protected, and the foreigners weren't much of a threat anyway."
How the civilian aircraft industry -- Boeing, McDonnell-Douglas, and Lockheed, as well as the big engine manufacturers, Pratt & Whitney and General Electric -- got into this predicament is the story that Newhouse tells, in fascinating detail and with wit and insight.
Newhouse, whose previous books have been about arms control and European politics, is a New Yorker contributor, and he exhibits some of the excesses of fussy New Yorker style. Example: "The transatlantic competition in commercial aircraft has released tendencies, some of which are undesirable, some probably desirable, and some in conflict with each other." (What other alternative is there?)
Both are good books, but The Sporty Game, is shorter and sportier and more packed with information than The Chosen Instrument. Newhouse tells us, for instance, that "there have been twenty-two commercial jet-powered transports" built since 1952, "of which only two, thus far, are believed to have made any money. These are the Boeing Company's first two entries: its long-range 707 and its medium-range 727, the industry's biggest seller."
Bender and Altschul scoff a bit at Trippe's naive successor, Harold Gray, who "subscribed to the better- mouse trap theory. If you run a good company--safe, efficient, honorably behaved toward the public and the employees--the word will get out; the passengers will beat a path to your boarding gates." Alas, better does not always mean more profitable, for an airline or an aircraft manufacturer. Writes Newhouse: "Lockheed's L-1011--an airplane that is more admired within the industry than most others, including its rival, the DC-10-- had lost $2.5 billion by the time it was canceled."
Both books ably explore this strange corner of capitalism where the free market doesn't seem to operate very well. There may be others.