NO SOONER had Pan Am taxied into bankruptcy than another of America's once-big airlines -- Eastern -- pulled into its terminals for what looks to be the last time. If the costs of fuel are devastating, so is the red ink threatening so much of this country's airline industry for various reasons. Besides fuel prices, airlines have been hurt by weak demand -- some of it attributable to the recession and now even more in reaction to the possibility of terrorism. In addition to Pan Am and Eastern, airlines in fragile shape include TWA, Continental, Midway and America West. The same competition that produced lower fares and more air travelers than ever before also tested the management skills of new entrants as well as the giants of the industry -- and now leaves only a few surviving carriers. Will this drift continue until there is a single Monopoly Airlines controlling the routes, fares and frequencies of flight?
Hardly anyone in the business expects any new wave of carriers to enter the skies and challenge the near-lock of the remaining airlines. Similarly, there is no great call for a return to the kind of market that existed before deregulation some 12 years ago. As a result, Transportation Secretary Samuel K. Skinner has come to the conclusion, as he notes in today's For the Record, that some changes in foreign ownership rules should be part of any effort to improve the prospects for maintaining a competitive U.S. airline industry.
Foreign investors are prohibited from buying more than 25 percent of the stock of U.S. airline or from having what in effect could be considered control over any such carrier. It is this law that has prevented any weak airlines in this country from mergers with healthier airlines elsewhere in the world. But if outright control raises certain problems in this country, some additional loosening of the restrictions could help to preserve what competition remains.
Also, carriers from other countries could be allowed to compete more freely in the United States. Another step -- though it involves precious federal, state and local government dollars -- is an increase in the number and capacities of airport terminals, now dominated in large part by large carriers.
In the meantime, at least the Justice Department can continue its examination of whether airlines today are employing anti-competitive practices to keep rival carriers out of their hub-terminal operations, and whether certain airlines are using predatory pricing to hurt discount attempts.
It is in these directions -- rather than backward into the pros and cons of deregulation -- that the administration and Congress should go in what is an important effort to restore competition by healthy rivals for a demand that in the long run is destined to grow.