Passengers gain as airlines sort out deregulation
The worst may be over at Continental, but US airlines are heading for more turbulence. The only smooth ride in sight is for consumers, who are sure to get lower prices and better travel options.
''What we're seeing today is deregulation successfully at work,'' states Dan McKinnon, chairman of the Civil Aeronautics Board. He explains that since new carriers have entered the deregulated market, flyers now have ''more chances of getting a flight where they want to go, at the times they want to fly, and at lower costs.''
Despite a pilots' strike initiated on Saturday against Continental Airlines, the shrunken carrier has been able to keep almost all flights going (with some delays and cancellations) and over half its seats full. Spokesman Bruce Miller says the Houston-based airline, which filed for bankruptcy on Sept. 24, has plenty of pilots on hand beyond their immediate needs. The airline has even added 10 more flights to its daily schedule.Granted, it's been inconvenient for consumers to get at Continental's new $75 fares. At first, they could only get them at Continental counters. Lines are still long and phones busy. ''They're confused with what's going on right now, but they'll do anything for a discounted fare,'' says Betty Wilcox, a travel agent in Denver.
For the old carrier lines, the upheaval is ''sobering,'' as an Eastern Airlines executive puts it. In this year's second quarter, Eastern, TWA, Delta, Continental, Republic, and Western lost a total of $169.6 million. The airlines say low-cost competition, along with recession and high labor costs, have been the cause of their problems. While Republic and Western have been gaining labor's cooperation in cost-cutting, Continental's way out was bankruptcy.
''If Continental is successful operating with a Chapter 11 filing in effect, I believe other airlines unable to get labor concessions will adopt the same procedure,'' says Alfred Norling, an airline analyst for Kidder, Peabody & Co., the brokerage house. Eastern has already said it will follow the Continental strategy if it can't reduce labor costs by 15 percent.
''What is probably going to result is that a number of the carriers, as we know them today, won't be around in a few more years,'' says another analyst, who asked not to be named. Even a spokesman for TWA said his airline would have to think about changing its character if it couldn't cut labor costs.