The CIVIL AERONAUTICS BOARD has tentatively agreed to let Pan American and Texas International slug it out for control of National Airlines. It may, or may not, decide to let Eastern join the battle later this summer. Either way, the bright sun that is National's insignia seems about to set.
This decision to letone major airline be merged into another seems to be in accord with what Congress had in mind last year when it decided to begin deregulating the airlines. The idea was to thrust the airlines into the world of free enterprise in the belief that open competition will produce better service and lower fares.
At first glance, the idea that a merger involving a company as large as National may bring more competition seems strange. In the conventional wisdom, mergers between big companies are the antithesis of competition. That is basically the view taken by the Department of Justice and a CAB administrative law judge. Both have argued against a Pan Am or TI merger with National because they believe either would be anticompetitive.
In the new climate in which the airlines are arguing, the opposite seems to be the case. Pan Am is the weakest of the big airlines and needs a domestic route system, like National's, to compete on its international routes. Without a merger, it will have to build a domestic network from scratch, a costly and difficult process, or fade out of contention. TI, on the other hand, is a small airline trying to enlarge enough to give the big boys a run for their money. A merger will make it highly competitive all across the South and Southwest and across the Atlantic.
Given the ease with which the CAB is granting new routes to all airlines these days, any voids in competition that the disappearance of National creates are not likely to last long. Just last week, the CAB opened Hawaii to 15 airlines including (would you believe?) Ozark, which has grown from a tiny Midwestern feeder line a few years ago to a company with routes that extend from New York and Washington to Honolulu.
With this kind of jostling for position and markets going on, there are obviously going to be winners and some losers. National is the first of the big, old airlines to face extinction. It may not be the last.