Michael E. Levine, former airline executive and a principal architect of U.S. airline deregulation said today that U.S. airlines may be facing their worst crisis since the Great Depression of the 1930s, but he rejected re-regulating the industry or adopting capacity controls as the remedy.  In a speech before the International Aviation Club in Washington, DC, Levine instead proposed an eight-point recovery program, saying the industry, faced with soaring fuel costs and an uncertain economic environment, will need to adapt to the new conditions. Re-regulating “will simply postpone the inevitable adjustment and is a prescription for waste,” he said.  “Re-regulation will not affect the price of oil or the fragility of the economy.  Those fundamentals will take time, perhaps a lot of time, to fix.  The industry needs to adapt to these realities and to adapt, it will need the kind of innovation and flexibility that government regulation would impede.”

Levine, a former CEO of new entrant New York Air and senior executive of Continental and Northwest Airlines, is a principal architect of U.S. airline deregulation adopted in 1978.  A former Professor and Dean at Caltech, Harvard and Yale universities, he currently serves as Distinguished Research Scholar and Senior Lecturer at the New York University School of Law

Joanne W. Young, President of the International Aviation Club, said Levine’s speech was a major contribution to the important debate now underway in the industry as U.S. airlines (and the airports they serve) try to overcome the effects of greatly increased fuel prices by reducing capacity, cutting routes, and raising fares.  “The International Aviation Club, throughout its long history, has provided a forum for the exchange of ideas to make real progress on the challenges and opportunities facing the aviation industry.  Today Michael Levine’s thoughtful presentation has added to this important IAC legacy.  We are privileged to offer this true industry pioneer and leader, a forum to present his ideas, Young said.”

Levine’s eight-point plan includes calls for FAA to reduce operating waste and costs by building an ATC system that permits direct routings; revising bankruptcy laws to limit airline management’s right to reorganize, and assisting industrial development alternatives for communities trying to find alternative uses for abandoned facilities like airline hubs and maintenance centers.

He also called for “being freer with unemployment insurance in industries especially hard hit by changing economic conditions”, continuing to move to protect pensions from under funding and ultimate abandonment in bankruptcy, and moving to some sort of health care system not tied to employment, so that loss of an airline job (or an auto company job) doesn’t mean loss of health insurance and potential financial catastrophe to workers, while relieving shrinking airlines from the burden of legacy health costs.

“Regulation didn’t create Southwest and PSA.  It didn’t create JetBlue.  It didn’t create route systems that linked dozens of international cities with interior U.S. gateways.  It didn’t create alliances.  We could go on,” Levine stated.

“What we need most now,” he said, “is for multiple firms with a great deal at stake thinking hard about how to survive and even prosper in the environment that is emerging.”

New trends and critical developments throughout international air transportation are the focus of the International Aviation Club of Washington, DC. Since 1961, the IAC has been the forum for new faces and new pronouncements affecting commercial aviation in the United States and the worldwide community.

Read the full speech of Michael E. Levine:
"Airline survival in a tough world"

Source: The International Aviation Club of Washington
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