U.S. deliberates airlines' future as losses pile up
By Marilyn Adams, USA TODAY
Amid the airline industry's worst financial downturn, the federal government is poised to play its biggest role in the industry since deregulation in 1978. Decisions by federal officials — some this election year — are expected to help shape the future of the industry, now in its fourth year of multibillion-dollar losses.
United argues its request for a $1.6 billion loan guarantee is needed. Others say its risky for taxpayers.
For the industry, those decisions might help determine which carriers survive and which become takeover targets — or simply fade away. For consumers, the decisions could affect whether their hometown gains or loses air service, and how much they'll pay for air travel.
"Over the next few months and years, the government's intervention or absence of intervention could substantially alter the industry," says Washington-based aviation adviser Jon Ash, who has followed the industry for 30 years.
On the transportation docket:
Where are the airlines going?
USA TODAY columnists sound off on the future, and possible demise, of the major carriers. Joe Brancatelli: The beginning of the end in the airline wars David Grossman: Mission impossible:
Here's the real reason the Big Six are dying
•Loan guarantees. A three-member federal panel is weighing whether United Airlines will get a $1.6 billion federal loan guarantee. The No. 2 carrier says it needs the guarantee to emerge from bankruptcy reorganization and survive.
•Foreign ownership. In talks with the European Union, U.S. negotiators are under pressure to raise to 49% the voting stake a foreign carrier can have in a U.S. airline. The current limit is 25%. The change would encourage the flow of capital into U.S. airlines. It also could lead foreign investors to start carriers here.
•Mergers. With most big airlines hemorrhaging cash, antitrust officials at the Justice Department might be drawn again into an airline acquisition proposal. The most likely takeover candidate is No. 7 US Airways. In 2001, Justice blocked United's bid to buy the Arlington, Va.-based carrier.
Each decision is fraught with controversy. Big airlines say their financial messes result in part from the Sept. 11 terrorist attacks. United and American each lost two jets that day. The drop in air travel that followed slammed the whole industry.
Furthermore, airlines say, the deregulation that freed them 25 years ago to compete on fares and routes did little to remove government from their daily lives. They say they're burdened by constraints on mergers, by federal taxes and by other demands other industries don't face.
Some say the time has come for government to step aside and let the free market rule. That would lead to a natural restructuring of the industry.
"Getting rid of some carriers would be a good thing" for consumers, says economist Clifford Winston of the Brookings Institution.
By Marilyn Adams, USA TODAY
Amid the airline industry's worst financial downturn, the federal government is poised to play its biggest role in the industry since deregulation in 1978. Decisions by federal officials — some this election year — are expected to help shape the future of the industry, now in its fourth year of multibillion-dollar losses.
United argues its request for a $1.6 billion loan guarantee is needed. Others say its risky for taxpayers.
For the industry, those decisions might help determine which carriers survive and which become takeover targets — or simply fade away. For consumers, the decisions could affect whether their hometown gains or loses air service, and how much they'll pay for air travel.
"Over the next few months and years, the government's intervention or absence of intervention could substantially alter the industry," says Washington-based aviation adviser Jon Ash, who has followed the industry for 30 years.
On the transportation docket:
Where are the airlines going?
USA TODAY columnists sound off on the future, and possible demise, of the major carriers. Joe Brancatelli: The beginning of the end in the airline wars David Grossman: Mission impossible:
Here's the real reason the Big Six are dying
•Loan guarantees. A three-member federal panel is weighing whether United Airlines will get a $1.6 billion federal loan guarantee. The No. 2 carrier says it needs the guarantee to emerge from bankruptcy reorganization and survive.
•Foreign ownership. In talks with the European Union, U.S. negotiators are under pressure to raise to 49% the voting stake a foreign carrier can have in a U.S. airline. The current limit is 25%. The change would encourage the flow of capital into U.S. airlines. It also could lead foreign investors to start carriers here.
•Mergers. With most big airlines hemorrhaging cash, antitrust officials at the Justice Department might be drawn again into an airline acquisition proposal. The most likely takeover candidate is No. 7 US Airways. In 2001, Justice blocked United's bid to buy the Arlington, Va.-based carrier.
Each decision is fraught with controversy. Big airlines say their financial messes result in part from the Sept. 11 terrorist attacks. United and American each lost two jets that day. The drop in air travel that followed slammed the whole industry.
Furthermore, airlines say, the deregulation that freed them 25 years ago to compete on fares and routes did little to remove government from their daily lives. They say they're burdened by constraints on mergers, by federal taxes and by other demands other industries don't face.
Some say the time has come for government to step aside and let the free market rule. That would lead to a natural restructuring of the industry.
"Getting rid of some carriers would be a good thing" for consumers, says economist Clifford Winston of the Brookings Institution.
You have forgot about one more loss at AA. That loss is the puppet union (the twu) that they are so proud of leading around on a leash. THE TIME FOR CHANGE IS NOW!!!!! VOTE AMFA!!!!!!! 
