IAM Makes the Case for Airline Regulation

In remarks delivered at a forum convened by U.S. Transportation Secretary Ray LaHood, Transportation GVP Robert Roach, Jr. reaffirmed the IAM’s long-standing position that today’s airline industry is a casualty of lax regulation and failed market policies that have sucked the life out of a once proud, efficient and stable industry.

“There is no need for a lot of discussion on the state of the airline industry today. We can all agree it’s a disaster,” said GVP President Robert Roach, Jr. “What we need is action. We need regulatory reform. Not the rigid deregulation we had 30 years ago, but limited reform that can create a stable industry.”

The event, dubbed the “Future of U.S. Aviation Forum,” was chaired by Secretary LaHood and FAA Administrator Randy Babbitt and featured presentations from labor, management, consumer groups and investors. Interestingly, no CEO from a major U.S. carrier attended.

GVP Roach cited the dramatic increase in airline bankruptcies as an example of how the industry and the nation have been ill-served by deregulation: “There have been 185 airline bankruptcies in the last 30 years, with 45 in this decade and 11 in 2008 alone. In contrast, before 1978, airline bankruptcies were extremely rare.”

The IAM was a vocal opponent of the Deregulation Act of 1978, which opened the door to cutthroat fare wars between carriers hoping to price their competition out of existence.

In addition to service disruptions, airlines sought cost savings from extensive outsourcing, cutting the amount of heavy maintenance performed in-house by more than 70 percent since 1998.

“Nobody can deny the industry is in a state of perpetual crisis,” said Roach. “The industry has proposed and enacted many ineffective solutions over the years – mergers; consolidation; bankruptcy, abolishing pensions; slashing wages; subcontracting work; global alliances, increased foreign ownership – but none of the industry’s initiatives have worked. We are worse off today than we were 30 years ago.”

Roach called for a presidential commission of all industry stakeholders to explore a limited form of industry re-regulation.

“Our initiative for sane re-regulation is not a call for a return to the overly restrictive pre-regulation days of the Civil Aeronautics Board,” said Roach. “Regulation should include simplifying air fares, prohibiting carriers from charging fares below their costs, prohibiting anti-competitive mergers and acquisitions, encouraging expanded service to small and medium-sized communities and raising the bar for new airlines to enter the industry.”