Freight Dawgs Rule
- Dec 17, 2003
- Total Time
U.S. airlines are being protected by government assistance that won't help them become profitable over the long term, said Rod Eddington, the outgoing chief executive of British Airways Plc.
``State subsidies preserve bad habits and America should do itself a favor by returning to the principles of free competition,'' Eddington, 55, said at a lunch in London today. ``America is turning from the land of the free to the land of the free ride.''
Four of the seven biggest U.S. airlines are operating in bankruptcy, for the first time since 1991, after Delta Air Lines Inc., the third-largest U.S. carrier, and No. 4 Northwest Airlines Corp. asked for court protection last week. U.S. airlines have benefited from as much as $20 billion of subsidies and loan guarantees since the Sept. 11, 2001, attacks on New York caused air travel to slump, Eddington said.
U.S. carriers ``have been dumping capacity on the north Atlantic'' and benefiting from ``protected routes,'' Eddington said. ``They still cannot make a profit.''
North American carriers had operating losses totaling $9 billion last year, while the worldwide industry had a loss of $5 billion, he said.
Excessive regulation and aviation rights based on national ownership are blocking takeovers in the industry, he said. ``I find it offensive because it is stupid. It rewards bad habits.''
``The world does not need 300 airlines,'' he said. ``The right number of airlines is likely to be 10 or 20, not 200 or 300, but the market should decide.''
Eddington, who is retiring, will be replaced by Willie Walsh, 43, the former chief executive of Ireland's Aer Lingus, on Oct. 3. Walsh is credited with turning around the Irish carrier in part by firing a third of its workforce.
As chief executive, Eddington cut more than 13,000 jobs at British Airways, Europe's third-largest airline, and trimmed costs to compensate for a slump in traffic and rising fuel prices. British Airways on Aug. 5 said first-quarter profit more than doubled as fares rose for the first time since the 2001 attacks.
The airline yesterday said it started disciplinary action against three employees following an investigation into an illegal strike that stranded 100,000 passengers at London's Heathrow airport in August. British Airways workers walked off their jobs in support of fellow union members at the airline's caterer Gate Gourmet.
``Outsourcing has been fundamental to the airlines that have survived'' after Sept. 11, Eddington said. ``Is anyone going to take catering in-house? I don't think so.''
``The vast majority'' of former state-owned British Airways' 46,000 employees ``know now it's not the state but the customer who pays their salary,'' he said. ``It's not a unanimous view and it has to be. We will win those battles of the mind.''