Aviation: Charting a New Course

Into Washington’s Sheraton-Carlton Hotel last week walked the vice presidents of the U.S.’s major airlines under an unusual safe-conduct guarantee from the Government. To allow the airline executives to come to realistic grips with their mounting problems and to work out some solutions, the Government promised them a seldom granted immunity from antitrust prosecution while they put their heads together. The meeting followed by only a week a closed meeting of major airline presidents with the Civil Aeronautics Board’s new Chairman Alan S. Boyd—and illustrated the sorry state in which the lines find themselves. Result of the meetings: the U.S. air passenger can expect fewer frills, higher fares, and new penalties for not showing up for his flight; the carriers themselves will get cracking in a new frontal attack on some of their pressing ills.

No Classic Detachment. The moving force behind the meetings was Alan Boyd, 39, a lanky, earnest ex-Air Force troop carrier combat pilot, who was a Florida state utilities and railroad commissioner before President Eisenhower appointed him to CAB in 1959. “I don’t want to play God,” says Democrat Boyd, “but CAB cannot maintain a position of classic detachment. I do not want my administration to be remembered as the one that let the airlines slide into as much trouble as the railroads are in.” Boyd told the airline executives flatly: “We have all got to start doing a better job.” No one could disagree; the trunk lines have already lost $17 million so far this year, may lose as much as $22 million before year’s end. Plagued by soaring costs, withering overcompetition and too few passengers, the lines are desperate to find measures that will cut their losses. Some of the measures in the works:

> Effective in mid-November, all free meals and all hard liquor will be eliminated from coach flights; only coffee, tea or milk will be served free. Cold snacks will be available—at a price. First-class service will remain substantially unchanged. So-called “frills in the cabin,” claim the airlines, now cost them about $60 million a year. Boyd’s recommendation: “Devote less attention to being traveling dining rooms, more to pure transportation.”

> Passengers in both coach and first class will no longer be able to select seats in advance. Reverting to the earlier days of air transport (and copying a system recently installed by Eastern Air Lines), seating will be on a first come, first served basis.

> No-shows will probably be penalized once again, perhaps by imposing on all tickets an extra charge that would be refunded to every customer who shows up to claim his seat. About 11% of total tickets sold are now no-shows.

>Promotional fares, which are costing the airlines money to administer, may be axed. The first casualty: American Airlines cut-rate youth fare, which will not be picked up by other lines. — The airlines are seriously considering lifting coach fares from about 75% of first-class fares to about 80-85% if CAB will agree—though they hope that fewer frills will ultimately make for cheaper, more utilitarian air travel.

Weightier Problems. Though no one expects that these new measures will cure all of the airlines’ ills, agreement on the smaller points opens the way for the lines to seek solutions to the weightier problems also discussed by Boyd and the presidents. Both sides recognized that the single most pressing problem is overcompetition. Boyd favors mergers to eliminate wasteful competition. Says he: “There is no magic number of U.S. airlines to ensure competition.” Some airline presidents prefer an orderly cutting back of over-competition on key routes, which are sometimes flown by as many as eight airlines—with most of the planes hardly half-full. Says one president: “We should divert the half-filled jets to smaller cities that are crying for jet service.”

Concerned about the crippling costs of jet operations, Boyd and the presidents zeroed in on one likely solution: consolidating ground facilities. At many airports, each line maintains enough aircraft-support equipment, such as jet tow tractors (average cost: $29,000), engine starters and stairs, to service all the other lines as well. Consolidated repair and engine-rebuilding shops offer even greater possibilities for savings.

As competition from foreign lines grows ever more keen, some U.S. airline presidents also feel strongly that it makes little economic sense for U.S. carriers to compete on overseas service. A more sensible approach, the presidents argued in Washington, would be to grant U.S. lines exclusive routes. For service to such im portant gateways as London and Paris, which the second U.S. line might be loath to relinquish, they suggest that the flights —and revenues—should be pooled and the schedules arranged so that the two lines would complement, and not compete with, each other’s services.

Such solutions were only in the exploratory stage, but they were the first traces of a new blueprint that might enable U.S. airlines to adapt to the harsh economic realities of the jet age.