Recent events may have given us a look at the future of air transportation -- a future dominated by big networks and even bigger global alliances, with far fewer niche players and low-fare specialists than we thought we were going to have.

It was not quite five years ago when a noted Wall Street analyst, JP Morgan's Jamie Baker, pronounced -- with startling certainty -- that the future belonged to the low-cost producers, and that the low-fare carriers would "inherit the Earth." Not for the first (or last) time, the legacy network airlines were likened to dinosaurs.

For a while, things seemed to be going that way.

By way of rebuttal, however, UBS analyst Samuel Buttrick said at the time, "The big networks may be dinosaurs. But dinosaurs were big, ruled the Earth for a long time -- and at least some evolved into birds."

Now it appears that some very big birds are on the horizon, particularly given the recent demise of MaxJet, Aloha, ATA and Skybus, and the bankruptcy filing of Frontier. 

But it would be a mistake to conclude that the bigness alone is the wave of the future. 

Among the many painful lessons the airlines have taught us since deregulation is that size alone confers few advantages on an ill-managed or financially weak company. The architects of the airline mergers that rolled over us in the 1980s placed too much emphasis on critical mass and not enough emphasis on managing change.

The architects of the proposed Delta-Northwest merger seem to understand that. Judging from their public statements and from their commitment to a joint venture within the SkyTeam alliance, what's driving them is not a quest for size, but for network efficiency.

The conundrum for our antitrust officials is that this efficiency comes at a high price by some standards.

A merger of Delta and Northwest will create the largest carrier in the country. It will be a virtual monopolist in some markets. And, when combined with its SkyTeam alliance partners, it will have a dominating position at two of Europe's most attractive connecting hubs, Amsterdam and Paris.

These concerns are reasons enough to ask if this is the future we want for the air transport industry.

It's a tough question, but it is made easier by the realization that with today's fuel prices, there are few other obvious paths to profitability. If the legacy airlines cannot adopt the survival strategies that Delta and Northwest have devised, what hope do they have of evolving at all?



For the campaign trail

The Travel Industry Association is calling on the presidential candidates to address the problems facing the air travel industry.

Not a bad idea, but it's not just air travel that needs attention. We think the next president ought to put more into, and get more out of, his (or her) Department of Transportation in every way possible.

Congestion, delays, inconvenience and high prices for transportation impose enormous costs on the national economy and interfere with the efficient movement of people and goods -- and waste energy to boot.

The next secretary of transportation needs to be a powerful, visionary superstar who can get America moving again -- on wings, wheels, rails, whatever. 

Comments
JDS Travel News JDS Viewpoints JDS Africa/MI