OOPS, there goes another one. With the announcement that People Express has agreed to be acquired by Texas Air, another airline looks to be disappearing, at least as an independent entity. Such a merger would be lamentably anticompetitive.
This windup of the story of the pioneer no-frills carrier, which used bargain-basement fares to entice all sorts of people into the skies and put Newark, N.J., on the traveler's route map besides, has its bittersweet irony. Donald Burr was president of Texas International Airlines, and Frank Lorenzo chairman, before Mr. Burr left to start his own venture.
Now Burr is selling out to Mr. Lorenzo, whose Texas Air empire has meanwhile expanded to include New York Air, Continental, and, if questions of competition can be resolved, Eastern.
Allowing Texas Air to buy People -- which would include People's Frontier, now in bankruptcy proceedings -- would likely save People itself from bankruptcy. But bankruptcy could lead to the transfer of People's assets, including its valuable landing slots, to the hands of another operator -- perhaps a brave, new low-cost start-up, rather than the agglomerating Lorenzo.
The desire to avoid bankruptcy, however, is thought likely to make the United States Department of Transportation gloss over questions of competition in the People-Texas deal. The department has already OK'd two mergers over objections, on grounds of hindrance to competition, from the Justice Department.
The rationale for airline deregulation included free entry of newcomers to the marketplace. But the reality is that established carriers exercise strong control over landing rights and airport gates. If there's no place to come down, a new airline won't be able to get off the ground.
What's needed is a more hard-nosed insistence on competition aloft and a more equitable and flexible system for apportioning facilities on the ground.