• U.S.

Airlines: Skyful of Trouble

4 minute read
TIME

For travelers in a hurry, Eastern Air Lines’ hourly “air shuttle” has been a boon from its inception eight years ago. The service, which links New York-Newark with both Washington and Boston, guarantees passengers a seat even if they show up at the last minute. When passengers fill one of the jet planes to capacity, Eastern simply rolls out a second-section backup craft—usually a propjet Electra—to handle any overflow. The shuttle drew 3,200,000 passengers in 1968. But Eastern last week advised the Federal Aviation Administration that “the life of this service is now at stake.”

That warning was Eastern’s way of pressing for changes in FAA restrictions on airport traffic scheduled to go into effect in April. Aimed at relieving air congestion in the Chicago-New York-Washington “Golden Triangle,” the restrictions affect operations at five airports —New York’s John F. Kennedy and La Guardia, Newark, Washington’s National and Chicago’s O’Hare. Eastern objects to an FAA proposal that would rigidly limit takeoffs and landings by all commercial and private planes to 60 an hour at Newark and La Guardia. That would restrict its ability to add extra sections to its shuttle flights. The result, says Eastern, would be that “the air shuttle could not live up to its seat guarantee.” Confronted by the argument, the FAA may very well wind up bending its restrictions for Eastern’s benefit, particularly if shuttle users complain loudly enough.

Tobacco Road. An end to the popular, if only moderately profitable service would be another setback for Eastern, which is the most sorely troubled major U.S. airline. It ran a deficit of about $10 million in 1968, and few airline analysts expect it to fare much better in 1969. The price of its stock has dropped 50% since 1967.

Eastern’s main problem is that it is a relatively short-haul carrier. It generates 45% of its revenues within the crowded Golden Triangle and much of the rest from the short hops that Former Chairman Eddie Rickenbacker once characterized as “Tobacco Road stops.” Fare structures are generally less profitable on short hauls than on longer flights. And Eastern’s concentration on densely traveled routes has left the carrier vulnerable to the traffic congestion that the FAA is desperate to alleviate; delays cost the line $6,000,000 more last year than in 1967.

Possible Partners. Eastern had high hopes of winning rich new routes after a Civil Aeronautics Board examiner recommended approval last April of its request for runs to Hawaii and Asia. But Eastern’s lobbying in Washington did not measure up to that of other carriers, most of which engaged high-power political bigwigs to plead their cases. When the matter reached the White House, President Johnson divided new Pacific passenger routes among five airlines, but bypassed Eastern altogether (TIME, Dec. 27). That left Eastern Chairman Floyd Hall committed to buy $48 million worth of stretched DC-8s, which are designed for long-haul routes.

The lagging line stands to be helped a bit by fare increases. Last week the CAB gave preliminary approval to hikes averaging 3.8% for all airlines, effective

March 1. That will not get to the root of Eastern’s basic troubles. Unless the Nixon Administration reconsiders the transpacific routes—and that is a remote possibility—Eastern may well have to merge with another, longer-legged line. Other airlines also may be forced to merge in order to get the long routes and big capital resources needed to support the costly jumbo jets and the supersonic transports of the 1970s. Some industry officials foresee a general realignment and expect the number of trunk lines to shrink from eleven to as few as five or six within a decade. The possible merger partners mentioned for Eastern include Delta, Braniff, Continental and Northwest.

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