Air Transportation: September 6, 2002


The Airline Pilots Association says that most US airlines are headed for bankruptcy. The problem is that costs of all types (taxes, fuel, security, personnel, and other operating costs) continue to climb while the market is keeping ticket prices low. Before deregulation, the Civil Aeronautics Board set prices based on these costs and every passenger had to pay them or not fly at all. But since deregulation, the government has added numerous new taxes (including the latest security taxes) and passengers have so many choices that they will not pay more than a certain amount regardless of what the cost is to the airlines. Major airlines have already begun painful cost-cutting moves. The Department of Defense may step in and negotiate more deals to obtain civilian air transports, particularly freighters, for military crises. Paying the airlines for the right to grab more transports on short notice, for example, than the existing CRAF (Civil Reserve Air Fleet) program allows. CRAF, first organized during the 1950s, was used for the first time in 1990 for the Gulf War. --Stephen V Cole


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