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The real reason Oberstar and his cronies fight against consolidation....

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Sedona16

Well-known member
Joined
Dec 5, 2001
Posts
564
Its certainly not about "protecting jobs" or being good for the industry as they might lead you to believe. Its not about a free market system or keeping airlines viable or profitable allowing them to pay their employees decent wages or staying out of BK (which ultimately causes more cost to the tax payer....but lets conveniently ignore that for now). Its about LOW TICKET PRICES TO THE CONSUMER. Its about getting re-elected. Its about allowing Jim Bob to fly all the way across the country for $99 or less. Labor and career aspirations for employees be damned!

I wont say that deregulation was necessarily the wrong choice but as an airline employee I certainly dont like the attitude of the guy behind it and the reasons he gloats about what he did (read below). The Feds say deregulation and a free market system are what the airline industry needed, yet today, after the fact, they always have their hand in the cookie jar trying to get what they can out of the deal, picking and choosing what they will continue to regulate. Whether its trying to force more fees on already strapped airlines to repair a severely broken ATC system, making airlines pay more to undo governments own lack of planning via "congestion pricing tactics", or making airlines shoulder the burden for increased security demands they always want someone else (the airlines and their employees) to cover their costs. Its kind of like the guy that shows up at a pizza party, eats ten pieces of pizza then doesn't want to throw his ten bucks in the kitty. On top of all this they then have the gall to screem bloody murder when airlines try to figure ways to raise ticket prices and change route structures and eek out a profit when oil reaches $100 barrel. A perfect example of wanting your cake and eating it too. I would say Oberstar is most assuredly on the same page as Kahn. Read on....

Wrath of Kahn kept airfares low

By Dan Reed, USA TODAY
ITHACA, N.Y. — At 89, Alfred Kahn doesn't fly as much as he used to. When he does, he can't help but smile and feel a sense of accomplishment when he sees how crowded the planes are these days.
"Sometimes, I even gloat a little bit," he admits with an impish grin. "Of course, unless I'm traveling with an associate, no one around me has any idea that I had anything to do with creating those circumstances."

TELL US: What do you think about the effects of airline deregulation?

More than anyone else, Kahn, a Cornell University economist who headed the old Civil Aeronautics Board under President Carter, gets credit for the dramatic lowering of fares over the past 30 years that has powered the explosion of demand for air travel.

Last year, a record 745 million passengers boarded flights in the USA. Most paid far less than they would have had Kahn not used his considerable wit, charm and communication skills to talk Congressinto letting the airlines, not the government, decide where and when they would fly and how much they would charge. The financial benefit to travelers? Staggering.

In 1978, when the Airline Deregulation Act passed, the average air traveler paid 8.3 cents per mile for a flight. In 2006, travelers paid just less than half that rate on an inflation-adjusted basis, according to the Air Transport Association, the industry's trade group.

Kahn estimates consumer savings at $5 billion to $10 billion a year. But Dorothy Robyn, an economist at The Brattle Group in Washington, and sometimes Kahn collaborator, says, "Fred's just being modest. Most estimates I've seen put it at closer to $20 billion."

Robyn says only the past two inflation-fighting Federal Reserve Board chairmen, Paul Volcker and Alan Greenspan, have had bigger impacts on Americans' wallets than Kahn, whose impact continues to be felt by far more than just airline passengers. Kahn has been a major player in the broader deregulation movement that persuaded Congress to give other industries such as trucking, telecommunications, railroads and financial services the freedom to set their own prices without government involvement.

Kahn, in a recent interview in his office near the Cornell campus, put it another way: "I'm a ham. I like the spotlight."

During the debate and in the early years of deregulation, most airline executives barked about the enormous upheaval in their business caused by "academics" like Kahn, using the word as a near-slur. Similarly, labor leaders opposed deregulation for the hundreds, even thousands, of jobs they predicted would be lost. Robyn says some concerns were well-founded. But those negative side effects were worth it to the deregulators, "whose goal from the start was … to make it so that air travel was no longer something only the elites could afford." Kahn says he'll gladly shoulder the blame for today's crowded conditions aboard commercial flights and for what he concedes in many cases is a dramatic reduction in service quality.
"People want both affordable and comfortable transportation," he says. "In the old days, you liked that empty middle seat next to you. But in the old days, you also were paying for that middle seat next to you. You just didn't know it."

He also pleads guilty, in part, to helping create some of the economic pressures that make airline profits small, when they exist at all, and industry jobs arguably tougher and less rewarding.
But he quickly adds, "Airlines were pretty unhealthy financially before deregulation, too. We didn't make things worse, and we opened up the way for new, discount carriers like Southwest (LUV) to succeed by bringing the fruits of deregulation to average people."
Regulation kept prices high and suppressed demand, he says. And labor, knowing that management could persuade the government to let them pass through any cost increases, "always took too large a share of the revenues for the airlines to ever be very profitable over any reasonable period of time."

In a speech in September to Washington, D.C.'s International Aviation Club, current Undersecretary of Transportation Jeff Shane, the department's top policy official, compared Kahn's victory in the deregulation debate with the bumble bee's improbable victory over the laws of aerodynamics to achieve flight.

Politically, Shane says, there was no way that Kahn, with the support of the Carter administration, should have succeeded. But they put together an unlikely coalition of liberals who were willing to go against the wishes of organized labor to bring low fares to the masses and conservatives willing to buck captains of industry and Wall Street to reduce government's active involvement in the economy.

Putting the arcane subject of deregulation "on the national policy agenda with such prominence that it simply had to be addressed is one of the most interesting stories in the annals of Congress," Shane says.
 
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Deregulation of America

Kahn is credited with the very act that will cause MONOPOLIES in America and the HIGHEST TICKET PRICES EVER.

And SWA will be the type of company which will be charging $1000 per coach ticket soon.

America knew in the 1920 and 1930's of the threats of monopolization of industry and created regulation to prevent unfair competition. The Anti-Sherman Act and all the other government regulation was and IS needed for a CAPITALIST system to function.

Unregulated CAPITALISM creates MONOPOLIES which destroys CAPITALISM and AMERICA!

Alfred Kahn has help to destroy AMERICA!!!!
 
But don't think the ways of Kahn are going to be resisted.

Almost all Americans are to stupid to care.

As a group we are more than willing to give our country away one bad law at a time, one bad labor contract at a time, one illegal bankruptcy at a time.

Who thinks UAL's bankruptcy was legal?
Who thinks NWA bankruptcy was legal?
Who think DAL bankruptcy was legal?

Each one was run just like Al Capone buying off a judge in the 1930's. All the judges were bought and paid for with promises and lies. And the employees and ALPA each contributed to the illegal acts willingly.
 
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But don't think the ways of Kahn are going to be resisted.

Almost all Americans are to stupid to care.

As a group we are more than willing to give our country away one bad law at a time, one bad labor contract at a time, one illegal bankruptcy at a time.

Who thinks UAL's bankruptcy was legal?
Who thinks NWA bankruptcy was legal?
Who think DAL bankruptcy was legal?

Each one was run just like Al Capone buying off a judge in the 1930's. All the judges were bought and paid for with promises and lies. And the employees and ALPA each contributed to the illegal acts willingly.

Go that ALPA shot in there at the last sec.... whew... that was close...but you did it...good man..
 
If not for deregulation most of us would not have jobs to complain about. It is a fact the deregulation helped to spur competition and an increase in the number of airlines in the country. With more airlines that equals more jobs.
 
Kahn is credited with the very act that will cause MONOPOLIES in America and the HIGHEST TICKET PRICES EVER.

And SWA will be the type of company which will be charging $1000 per coach ticket soon.

America knew in the 1920 and 1930's of the threats of monopolization of industry and created regulation to prevent unfair competition. The Anti-Sherman Act and all the other government regulation was and IS needed for a CAPITALIST system to function.

Unregulated CAPITALISM creates MONOPOLIES which destroys CAPITALISM and AMERICA!

Alfred Kahn has help to destroy AMERICA!!!!

It's the Anti Dog-Eat Dog rule. The Airline Unification Plan. Sounds like Wesley Mouch, Eugene Lawson, Orren Boyle and James Taggart.
 
Why Airline Mergers Now?
January 16, 2008; Page A12


Consolidation in the air is once again in the air, so to speak. But is the business case for airline mergers any stronger today than two years ago, when this column rained on a similar parade?
US Airways' Doug Parker, ironically one of the most consistent voices in favor of consolidation, recently offered in a conference call a hymn of praise to his competitors for aggressively cutting capacity to protect margins despite softening traffic.
He placed his finger accurately on the recurrent source of airline grief -- too many seats chasing too few passengers in a travel slump. Downturns in the last 15 years have twice wiped out all the profits the industry earned since Wilbur and Orville put wings on a bicycle. Yet now Mr. Parker says his fellow skippers' latest efforts to keep available seats in line with demand represent a "pivotal and probably momentous change in our industry."
If airlines are able (for once) to maintain margins in a slump, what's the urgency of consolidation? Good question.
Mergers have been touted for decades as a cure for airline woes. But the costs and pain of a merger -- including labor strife and incompatible fleets and maintenance routines -- are borne by the merging parties, while the alleged benefits -- less competition, higher fares -- are shared equally by competitors.
Why be the sucker in this scenario?
A few costs at headquarters and the gate might be reduced, but how would a merger cut fuel or crew costs? Planes already are flying 80% to 85% full, leaving little scope for consolidation of passenger loads.
And parking planes in the desert is a quicker, cheaper way to reduce capacity in a travel recession. It's hard to see how consolidation would help much here, in the short term anyway.
So why the merger talk?
United's Glenn Tilton has been a chief perpetrator, but United has been at a loss about how to control costs (read pilots) well enough to avoid falling back into bankruptcy. And Delta is under pressure from hedge funds to seek a deal with either United or Northwest, though Delta's board could yet shrink from a tie-up. Both airlines are special cases -- with shareholders and/or executives eager to trigger a "liquidity event" to get out of their stock positions.
Yet now comes the backflip. On the radar screen are two new motivations for mergers -- one good, the other a national disaster in the making.
In March, a new "Open Skies" arrangement with the European Union will allow U.S. carriers to fly at will across the Atlantic, and between European airports. Somebody somewhere in airline suites undoubtedly is thinking how to get ahead in the scramble to reorganize his feeder networks and international gateways to capture a bigger share of this high-margin traffic.
Another reason mergers may finally be on the in-flight menu is a less happy one -- the U.S. air travel system's catastrophic devolution toward capacity-rationing by delay.
Blame the FAA. Over the past 20 years, the agency has been utterly defeated by its own bureaucratic and budgetary unsuitability to manage the complex technological upgrades required to keep pace with traffic growth. The consequences are already visible. Network airlines are withdrawing service, even profitable service, from smaller cities because it displaces more profitable traffic at congested hubs.
Airline execs have been predicting for years that rationing was just around the corner. The corner has arrived. The agency simply can't accommodate the billion passengers that, at current growth rates, would be seeking to fly in 2015. Economic prosperity and travel demand no longer will determine the size of the aviation market. There will only be as much flying as the FAA's antiquated systems can permit.
Ill is the wind that doesn't blow somebody a kiss, and such an environment is naturally more conducive to oligopoly pricing. Straitened capacity and growing politicization of the process by which take-off and landing slots are meted out will tend to favor incumbents over startups and interlopers, such as the low-cost carriers that once kept fares down and undermined any claim that consolidation among the majors might bring less competition.
Blame Congress. Presidents of both parties have argued for liberating the ATC system from the congressional budget morass, but Congress is loath to give up its vast patronage privileges. William Ris, head of government relations for American Airlines, points to a related problem: Lawmakers "react first as customers and only secondly as policy makers."
Congressional leaders fly constantly, and are no more analytical than the arthritic grandmother stuffed into seat 23A about the reasons for delays and cancellations. Instead, we get angry hearings blaming the airlines for "overscheduling." We get people like Chuck Schumer haranguing Delta for canceling service to Binghamton. We get Barbara Boxer telling airlines when they must taxi back to the terminal and let passengers get off a plane whose takeoff has been delayed, though the cause of delays is usually the ATC system.
Blame the airlines. The major carriers have gone AWOL in the fight for a reformed FAA. After 20 years of frustration, they no longer lobby or argue the case within hearing of the public. When the final meltdown occurs, expect the big incumbents cheerfully to repair to a congressional smoke-free room and divide up the system's limited capacity to the benefit of the big incumbents.
 
In what way exactly?

Kahn has enabled the next LCC to start up. Kahn has enabled investors to throw money at a start up by eliminated any government barriers to entry.

This elimination of these barriers to entry allows unethical companies to produce a seat below the cost of production using the invested money to sell the seat below production costs. i.e. Airbus.

This is not a sustainable way of doing business and is sanctioned by government regulators now because of Alfred Kahn.

Kahn has been bad for America!

And if you don't understand why, you just prove my point that Americans are too stupid to care about their country and their industries.
 

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