Flying Lessons for United
The flying public these days needs to know more than just how to track inexpensive airfares on the Internet or what to wear and carry through security.Skip to next paragraph
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It's also worth knowing the complex competitive forces on the volatile airline industry, especially when a giant like United can go belly up.
United's bankruptcy yesterday, coming four months after that of US Airways, has no one single cause, such as fewer fliers after Sept. 11, recession, or angry machinists (and partial owners) who wouldn't grant a cut in wages.
The world's second-largest airline juggled many challenges since deregulation in the late 1970s. Its brand name and market share helped it ride out much of that turbulence.
But a shaky combination of factors, including last week's denial of a $1.8 billion government bailout loan guarantee, showed that bigness and steadiness don't work anymore.
Nimbleness and flexibility - with Southwest Airlines setting the best example - have become the management model in an industry that's been forced to challenge the old system of high wages, job security, and even the hub-and-spoke route system.
United may reemerge stronger if it (and its employee-owners) learn such lessons. But in the last wave of airline bankruptcies during the early 1990s, only two of seven airlines that filed for Chapter 11 bounced back (Continental and America West).
Other countries, where airlines are largely protected, can marvel at how the US lets its giants fly solo in order to learn from their mistakes.