By Edward R. Beauvais
Much discussion has taken place regarding the US Airways acquisition of American Airlines. I have followed the events leading up to this transaction very closely because of my involvement in founding and managing America West Airlines for 12 years, from 1981 to 1992. As we all know, the creation of America West Airlines was made possible by airline route and rate deregulation in 1978.
The industry was carefully regulated by the U.S. Government from 1938 to 1978, a period of 40 years. There were so many changes that occurred during that period that, in 1978, deregulation was demanded by the consumer, academia, industry, print media, as well as the political community, in an industry that contained dramatic technology advancement as well as economic advancement.
The deregulated industry is now in its 35th year and the experience in both technological and economic advancement has accelerated well beyond anyone’s expectations. These developments have reached worldwide proportions with the U. S. leadership in ALL areas of the industry. Any two markets in the world are now reachable with nonstop service. Commercial aviation has grown to such a level that it now lubricates the world economy.
One of the most significant changes in the U.S. commercial aviation industry subsequent to deregulation was in the role of the U.S. Flag carrier in the U.S. international marketplace. Pan American World Airways, the primary U.S. – International carrier under regulation, had no domestic market feed and could not survive in the newly formed market driven environment. The access to the entire U.S. passenger market for a huge portion of all international travel is the cornerstone for the traffic support necessary for success for any airline anywhere in the world.
This continues to be vitally important for the entire U.S. economy which includes the technology, health care, manufacturing, food, agriculture, education, communication, transportation as well as many other industries. It is fair to say that we are where the rest of the world would like to be. Therefore leadership change was necessary for the U.S. carriers to compete effectively in this crucial area of the world’s economy.
The pending transaction of US Airways acquisition of American Airlines, making it the largest airline in the world, is extremely important for all of the above reasons. The U.S. leadership of this industry relied heavily on this transaction being approved. We build the airplanes, develop the technology, create the marketing mechanisms for this newly market driven environment. We design the navigation, communication, personnel, training, airport systems and almost all of the infrastructure of the entire aviation industry. As a result, the world has grown significantly smaller because of the dynamic developments in aviation. It is easy to see that this aviation industry is a GIFT from the United States’ to the rest of the world.
And finally, what about the future of the airline service at Phoenix. We are far better off with the approval of the transaction. The hub in Phoenix is critical to the efficient transportation of passengers throughout the southwestern part of the U.S. For the new American Airlines, it represents maintaining the needed competitive balance to United Airlines’ hub in Denver. Arizona’s relative position to California will become more important as the future develops. The access to every area of the west coast through the Phoenix hub will increase in importance over time. The efficiency of this transport system will be far superior to the cost of expansion or new facilities on the west coast. Phoenix will be where growth can best be accommodated in the future.