From the ground up
Analysts say airlines must adopt an entrepreneurial, highly adaptive approach to recover from Sept. 11
It is a graphic snapshot of the state of the airline industry today: acres of airplanes parked in rows, like abandoned toys, at a desert airport 100 miles north of Los Angeles.
At last count, before the Mojave Airport manager stopped talking to the press for "security reasons," there were more than 200 aircraft there. They are just some of the planes grounded by airlines as the aviation industry confronts the worst crisis in its history.
Announced layoffs have extended to about 100,000. Estimates of revenue losses for this year range from $5.5 billion to $10 billion.
"Let's face it," says one airline executive, "the industry is flat on its back."
Already beginning to weaken before the terrorist attacks of Sept. 11, the nation's airlines now face a dramatically changed business landscape.
Not only are there short-term goals to achieve, such as tightening security and winning back passengers; there are also long-term uncertainties that experts say could ground some carriers for good.
A $15 billion government bailout - $10 billion of it of it in guaranteed loans - is no panacea, some experts say. It could extend the lives of weak carriers that could soon go bankrupt anyway.
The proposed loans could also lead to increased federal involvement in airline operations. Many analysts say that could sharply limit the innovation and competition required today.
In an industry called conservative by many analysts - "pigheaded" by one - only the most adaptive, entrepreneurial carriers will survive.
"Philosophically, most airlines are not prepared for this," says Michael Boyd, an aviation consultant in Evergreen, Colo. "We can't rely on the same leadership anymore. We need leadership to respond in a wartime fashion."
One carrier experts predict will succeed: Dallas-based Southwest Airlines, the low-cost, low-fare carrier, which posted a third-quarter profit, something few airlines did. Southwest, which enjoys a near-legendary loyalty from its employees and customers, has often done well when faced with adversity.
Early in its 30-year history, for example, the company sold one of its four planes to meet payroll obligations. Employees responded by speeding up the turnaround time for servicing an aircraft, allowing the airline to make the same number of flights with three planes as it had with four.
After the September attacks, Southwest employees helped the company save money by working some hours without pay. (American Airlines executives promised a similar move last week, after announcing record third-quarter losses.)
And when curbside check-in was shut down, Southwest devised a plan that let it resume the practice a week before any other airline.
"Our success really comes from the fact that our people have a clear understanding of what our mission is, and they believe in it," says Southwest CEO James Parker. "And they figure out how to adapt that mission to whatever critical situation you're facing at the time."
In the near term, Southwest and other airlines face factors that are largely beyond their control. Experts note the psychological dimensions involved with people becoming comfortable about flying again, and they point to the federal government's role in creating and implementing tougher security measures.
Instead of leaving security up to airlines - which resulted in high-turnover, low-salaried security screeners - the government needs to take over those operations, perhaps creating a national agency for aviation security, argue many aviation analysts, as well as associations of pilots and flight attendants.
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