Most Of All, Kellner Wants Revamped Railway Labor Act
In a recent interview with Houston Chronicle business columnist
Loren Steffy, Continental CEO Larry Kellner came right out and said
what many of his counterparts in the US airline industry may be
thinking to themselves. With the government stepping in to regulate
the banking industry... why not increase regulation of US
airlines?
"If the government wanted to re-regulate the business, I
wouldn't be opposed to it," Kellner said, in a comment Steffy
called "stunning." But while the fact Kellner went on record in
saying so is noteworthy, the idea that large airlines may actually
favor some form of re-regulation is not really surprising.
Before the industry was deregulated in 1978, the government
dictated which airlines could serve domestic routes, in much the
same way the Transportation Department now governs the awarding of
certain foreign routes. While airlines complained then of an
overly-strict government bureaucracy, regulation also essentially
eliminated route competition among airlines, and allowed carriers
to charge much higher fares than they often
can today.
Given that most US airlines currently operate at heavy losses --
and are barely profitable even in the best of times -- it's not
hard, perhaps, to see why Kellner may wish to return to those
comparatively halcyon days, though Steffy notes Kellner's
statements marked "...the first time in more than two decades of
covering airlines that I've heard an executive pine for more
regulation."
Kellner carefully stated he doesn't want a wholesale return to
those days, per se... but he does approve of a change to the
current method of doing business, with airlines continuously
slashing fares to match the competition.
"What we've got today doesn't work," Kellner said. "It isn't
creating a stable industry."
Kellner also expressed his desire for controls on the two
greatest factors affecting profit margins: fuel prices, and labor
costs. In regards to the latter, Kellner proposes a thorough revamp
of the Railway Labor Act. That's the 1930s-era piece of legislation
that continues to dictate the labor contract negotiation process to
this day, and often results in contentious labor talks, federal
mediation and even strikes.
"The problem is the structure of the RLA creates a very
cumbersome process," Kellner said. "It hasn't worked well since
deregulation. It creates a tremendous amount of angst on both
sides."
Previous attempts to change the Act have failed on Congress, the
Chronicle notes, and few lawmakers seem particularly interested in
changing it now.