Word: cabs
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Dates: during 1970-1979
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...down from 8.840 per passenger mile in the first half of 1977 to 8.60 this year. Consequently, Eastern's break-even point has risen from 55% to 62% of capacity?that is, it makes money only when 62% of the seats are filled. Shuddering at the prospect of the CAB'S approval of another 70% reduction in some fares, Delta President Garrett declares: "At some point, the fare structure must be stabilized. There is no way you can cut fares 70% and continue to profit, because costs are simply too high...
Still lower fares are only part of Carter's plan for the airlines. His goal is total deregulation. The Government would continue to police safety, but the companies would be unencumbered by other federal regulations. For example, a line must now go through a lengthy CAB examination before it can win a new route, and once that route is granted, must provide satisfactory service or face CAB sanctions. Under the White House plan, the airlines would be free to start or stop service wherever they liked. Some small communities that have already lost their rail service would probably be deserted...
...bill that would free the CAB from its legal responsibility to fix fares and routes has passed the Senate but is bogged down in the House. It is expected to pass eventually, though probably not this year. Deregulation would be the most radical change in U.S. aviation history, greatly affecting the lines' ability to raise money for their next cycle of jet purchases...
...certainly needs more competition and fare flexibility in the air, the specter of unbridled price cutting and route grabbing frightens many financial experts, who fear that some lines will not be able to earn the returns needed to justify large loans. One airline financial officer calls the CAB'S free-enterprising Chairman Albert Kahn "an intellectual giant and a commercial idiot...
...controversy. In an interview with TIME Washington Correspondent Jerry Hannifin, he argued that the airlines are excessively panicked by the prospect of being exposed to the full force of a competitive marketplace. "What I suspect is that there is a search for another security blanket now that the CAB security blanket is being removed," he says. Rather than harming the airlines, Kahn contends, deregulation will help many of them prosper. "We are making every carrier in this country a potential competitor of the other carriers by saying if you want to enter a market, we will do everything...