Killing the Competition
Golly, whatever happened to America's good ol', bold-and-brassy, can-do competitive drive?
To see a troubling sign for our nation's famed, free-enterprise frontier spirit, sneak a peek at the downward flight path of America's major airlines. These corporations have become no-can-do, anti-competition behemoths, whining that there are too many airlines, too many planes, too much competition.
"It's a jungle out there," wail top executives of the airlines. So, to enhance their "competitiveness," they are urging a rash of mergers that would consolidate the industry into fewer and even bigger corporations. Yes, in their alternate (and perverse) universe, airline CEOs say that the only way they can compete is to ... well, have less competition!
"The industry needs to evolve into a more rational structure," asserts a top official at American Airlines. "We have an industry that is too fragmented, with too many competitors and with different ideas of capacity, pricing and strategic activity."
Hmmm. Where have we heard that before? Oh yes, from Adam Smith, the 18th century Scotish economist who is considered a founding guru of the free enterprise system. The notion of "many competitors ... with different ideas of capacity, pricing and strategic activity" is precisely what Smith hailed as the proper model for free enterprise.
But the competitiveness that Smith celebrated as beneficial to society is what today's timorous airline leaders see as an irritating barrier that they simply can't hurdle. Better just to lower the competitive hurdle. As the former chairman of Continental Airlines put it: "I mean, do we really need 19 domestic airlines in the United States? I think three or four network airlines would still give you plenty of competition."
Plenty? What he and other executives mean by "a more rational structure" is one that allows a small club of gentlemen to divvy up the market, cut flights and raise ticket prices in unison — without being challenged by pesky rivals.
Soon, at least one more brand name is expected to join Northwest, Pan Am, TWA and others that have succumbed to consolidation. Both Continental and US Airwaysare presently in talks to merge with United Airlines. United's chief, Glenn Tilton, has long been a podium-pounding evangelist for the corporate gospel of shrinking the industry into a handful of more cooperative competitors. This is the route to consistent industry profits, he preaches.
Well, yeah! It's called a shared monopoly, and any goober in Guccis can make profits from that rigged deal. Of course, Tilton comes from the oil industry, where he led the merger of Texaco into Chevron, so he's partial to creating a tidier market for corporate fun and profit — consumers be damned.
Astonishingly, to press their case for consolidation, industry executives point to the example of the telecommunications giants, which went on a merger binge a decade ago. Excuse me, but consumer satisfaction with the arrogance and avarice of conglomerated and consolidated telecom providers ranks down around public approval ratings for Wall Street banksters.
Also, Tilton is hardly an inspirational figure for American workers. In fact, he's a poster boy for rapacious CEOs who try to profit by knocking down employees. He used our country's skewed bankruptcy laws to abrogate contracts, forcing flight attendants, mechanics and pilots to take massive cuts in pay, health care benefits and pensions. He did, however, exclude one employee from the pain: himself. He pocketed $6,471,062 in 2008.
You'll also be glad to know that he's been an industry leader in slashing service at United and socking customers with a plethora of new fees. Now, Tilton wants to bring his executive magic to Continental, US Air — and who knows what after that?
Thank goodness the airline chiefs are not trying to run a hot dog stand or taco trailer. The competition would kill them.
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