Competition Is Good for Consumers (DCA Post OpEd)



Competition Is Good for Consumers - Saturday, August 24, 2002
My good friend Bob Crandall, as always, presented a tight, carefully crafted and eminently logical argument in his Aug. 15 op-ed column, "What Next for the Airlines?" Indeed, from the perspective of a present or former chairman of American Airlines, nothing would be more logical at this point than seeing one of the airline''s major competitors disappear, leaving hundreds of thousands of US Airways passengers looking to surviving airlines -- one of which, of course, would be American -- for their travel needs.
This is not good public policy, however.
When the Air Transportation Stabilization Board granted qualified approval for a $900 million loan to US Airways on July 10, it acknowledged that the company could be a viable competitor if it met some very stringent conditions that would set it on a sound economic footing. The underlying assumption clearly is that the public good is better served with US Airways continuing an extensive pattern of service in the East.
Crandall, on the other hand, would have us believe that the public would be better served, and have more options for lower fares, if US Airways were gone.
When the Stabilization Board granted conditional approval of a loan to US Airways, it was on the basis of the airline''s meeting its goal of significant cost reductions from its labor groups and its creditors and suppliers. Agreements with US Airways pilots and flight attendants -- already ratified -- along with salary and benefit reductions for all top officers of the company as well as non-union personnel were in place before the company turned to the courts under Chapter 11 of the bankruptcy code for assistance in reaching similar savings with certain major creditors. There is considerable optimism in financial circles (not to mention within the company) that this restructuring will be successful and that the company will emerge from Chapter 11 protection early next year.
In short, the requirements of the Stabilization Board, set in good faith, will have been met in good faith, and US Airways should receive the funds it needs to fully implement a plan that will serve more than 200 communities well for many years to come.
What does this mean?
First and foremost, US Airways will continue flying, saving the 40,000 jobs it represents. This, in turn, means that scores of communities will continue to have choices in air travel rather than see competition diminished. These same communities will see vital jobs saved rather than lost, especially for the many smaller and medium-size cities and towns served by US Airways and US Airways Express.
No one wishes more than US Airways'' shareholders, employees and creditors that this entire subject were not an issue. The indisputable fact, however, is that US Airways suffered disproportionately as a result of the events of last September, both because of its significant presence in the northeastern United States and because Washington''s Reagan National Airport, a keystone of the US Airways system, was closed for a prolonged time.
It was precisely for such reasons that the stabilization loan program was established. Moreover, the members of the loan board and their independent financial rating agency -- all clear-eyed financial experts -- have been stringent in their demands that companies seeking loans present viable, long-term financial plans and meet certain conditions before receiving publicly backed funds.
US Airways is well on the way to meeting those conditions and will not receive one dime until it does. But when those conditions are met -- and they will be -- US Airways will be well positioned to provide vibrant competition far into the future.
That is good public policy.
Stephen M. Wolf
The writer is chairman of US Airways.
© 2002 The Washington Post Company


Aug 24, 2002
One could argue that USAirways suffered disproportionately due not to the events of 11 Sep 01, but rather to the mismanagement and greed of Mr. Wolf.

If there were any justice there would be a way for him to ride off into the sunset awaiting failed airline managers without a bunch of people losing jobs.

For all his flAAws, CrAAndAAll was right on.

I also wanted to see what number I got now that I had to re-register. take care, all, and good luck.


Aug 20, 2002
Maybe if Mr. Wolf had paid more the airline instead of spewing his liberal - democratic views in Attache'

We wouldn't be suffering this sad fate...Goodbye Steven / Stephen
Just leave..quietly