When American Airlines' parent company, AMR, filed for bankruptcy protection this week, it marked the 100th time since 1990 that an airline company asked a court to keep its creditors at bay while it reorganized and cut costs. It was the 189th bankruptcy filing in the industry since the economic deregulation of the airline industry in the late 1970s, according to the Air Transport Association. AMR said it had no choice, because it couldn't compete with rivals that have already used Chapter 11 protection to help them cut salaries and other costs. Would the airline industry be more stable if it was nationalized?
Yes. We should nationalize big carriers: Ideally, the free market would rein in the airline industry, says Jeff Macke at Yahoo! Finance. But despite the 1970s deregulation, which scrapped government control of prices and routes, airlines are still subjected to "draconian" and inefficient rules. If mixing government and private companies doesn't work, and the government won't leave companies alone, why not "give nationalization a shot"? Amtrak is no prize, but at least "my train runs on time" — unlike my flights.
"American Airlines files for bankruptcy: Is nationalization next?
Nationalization will only make matters worse: The last thing we need is nationalized airlines, Reuters' Felix Salmon tells Yahoo! Finance. "There's not a good nationalized airline anywhere in the world, and they cost a fortune to taxpayers." What you want is a truly competitive market, where instead of having a few giant legacy carriers with a lock on all the good routes, you have "lots and lots of private airlines which just fly higgledy-piggledy all over the world."
"American Airlines files for bankruptcy: Is nationalization next?"
Well, deregulation certainly didn't help: The 1978 federal deregulation act "unleashed market forces on the hitherto closely regulated industry," says The Economist's Cassandra blog. In theory, that should have worked wonders. "But I have to admit that flying in America is a bit like being on Greyhound bus — though often with less service." Plenty of carriers in the Middle and Far East manage to stay aloft with "wonderful service." Maybe Western airlines can figure out their secret.
"American Airlines succumbs to the industry's head-winds"
Relax. This is just the way this business works: American's bankruptcy filing is no big deal, travel industry analyst Henry H. Harteveldt tells The New York Times. "Except for Southwest, there isn't a single airline that started before deregulation in 1978 that has not gone through bankruptcy," and those that have gone through it in the last few years have remained in business. AMR's troubles won't trigger any big change — "airlines do a better job at filing bankruptcy than delivering luggage."
"How does the American Airlines bankruptcy affect you?"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- China's leader is telling the People's Liberation Army to prepare for war
- How I lost all my money
- The religious right isn't retreating — it's reforming
- Diagnosing the Home Alone burglars' injuries: A professional weighs in
- How academia's liberal bias is killing social science
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- 10 things you need to know today: December 22, 2014
- A brief history of the Christmas present
- Why Pakistan won't hunt down the terrorists within its borders
- How to save money: 12 great personal finance tips
Subscribe to the Week