Not the unions, of course; but then, the cost structure related to them is billed as a primary issue. Then there’s the issue of the fleet – those MD-80s are a tribute to mechanical engineering and technology, but not to fuel usage. And there’s Wall Street, where shares of AMR dropped some 84 percent following the announcement, according to The Wall Street Journal.
What’s amazing to me is how numb we’ve become to a major company in a major part of our economic infrastructure going belly up. Eastern, Pan Am – now those were bankruptcies. American … except for the people at American, the attitude seems to be “Well, they’ll figure it out.”
I spoke with Joshua Schank of the Eno Transportation Foundation, a transportation policy think tank, about the bankruptcy filing. His basic message: “American Airlines has a network and is a well-established brand. American will go through bankruptcy and emerge stronger. I don't see it as a possible casualty.” A merger with another carrier is a possible scenario.
Says Schank, “I think the move indicates that they feel they’re at a competitive disadvantage; and they’re absolutely right. There’s been an industry consolidation that they have not been a part of. Bankruptcy has been a tool for seeking a competitive edge in the industry for some time. And the biggest complainer of that strategy was American. They apparently decided if you can’t beat ‘em, join ‘em.”
Regarding the impact on airports, Schank sees an impact on some but not the hubs, nor those tied to international networks. And it isn’t the airport cost structure playing a big role. Says Schank, “I don’t get the sense that the airport agreements are dragging the carrier down. The aircraft are affecting the bottom line; they’re still flying the MD-80s. They need to compete more effectively and they know it.”
For me, the thought that always occurs in these discussions is the law on foreign ownership. What would be the scenario for American if another international carrier were allowed to become a financial partner? Even a majority owner? It might be dramatic. Could change the landscape.
It’s a global world. Airports represent that as much as any entity on the planet … as do airlines. Maybe it’s time to unleash the shackles on a global industry and allow it to act globally, which is what it has been trying to do through the back door via alliances.
Thanks for reading. jfi
