Arnie WeissmannIn the second presidential debate, the incumbent was asked to give three instances in which you came to realize you made a wrong decision and what you did to correct it.

Its not a comfortable question to be asked in front of millions of people, and aside from acknowledging a few bad hires, the president wasnt about to tell stories against himself.

One wonders how other presidents would answer this question -- not other presidents of the U.S., but presidents of major corporations. Say, airlines.

This has been a year of recovery for most of the travel industry, but the airline segment is lagging. Are the CEOs of US Airways, Delta, United, Northwest, American and Continental willing to look into the dark, truthful mirror and cite three mistakes they and their predecessors made that have helped land them in their current dismal situation?

Of course, in many industries it would be unfair to expect the same answer from six fierce competitors, since businesses tend to run according to the individual direction of the chief executive.

Which brings us to Mistake No. 1: Willful homogenization.

If ever there were a copycat industry, it is the airline industry. From yield-management techniques to embracing hub-and-spoke systems, from commission cuts to inflight service, as one goes, all follow.

Why is that? Because the airlines may have been deregulated, but theyve never lost the mentality of a regulated utility. Its why you can fall asleep on an airplane and, when you wake up, the only clue as to what carrier youre flying is the seat coverings.

The most successful airlines -- JetBlue and Southwest -- went their own way and found profitability. In the final irony, Delta (with Song) and United (with Ted) tried to copy their models.

Mistake No. 2 was seeing their employees as enemies. The airlines are unionized, and, therefore, employee relations have an inherent adversarial component, but the bitterness that emerged between management and employees has affected everything from operating costs to customer service.

Two carriers have acknowledged their mistakes and moved to correct them. It is perhaps fitting that, after Continental and Frank Lorenzo brought airline-union relations to the lowest possible level, Continental and Gordon Bethune have now set the standard for employee-friendly relations.

American Airlines may well have avoided bankruptcy only by installing fresh leadership that could start down a new path with employees.

Mistake No. 3 is admitted in private, but not in public, and despite understanding this mistake, no action has been taken to correct it. Knowing what they know now, the airlines never would have embraced the Internet intermediary channel as they did. It completed the commoditization process their pricing policies started and set them on a fast downhill path.

There is, of course, one overarching cause behind all three mistakes, one primal source for airlines woes: Bad hires, of course.

The questions for shareholders to debate is: Were the bad hires made by the CEOs or the boards of directors?


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