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Oct282008

« 05. The Swelbar Deregulation Index »

100 People, Companies, Concepts and Events that Have Shaped the Course of the US Airline Industry (and one man’s career in the business).

The Fifth and final in a series on Deregulation:

To commemorate my 100th swelblog post and to cap off my analysis of 30 years of deregulation, I submit the list of the 100 most influential people, things and events that have shaped my views and the state of the airline industry during this long experiment in deregulation.

This is a personal list – any other industry observers would clearly differ. Indeed, I know personally some of the people and sat in the room on some key dates – many of them during my early days as a flight attendant and union member in the industry, later in Chicago during my work with United Airlines. Others I know only by reputation or admiration.

Regular readers are encouraged to submit their own.

1. October 24, 1978
2. China: my airline absolutely needs the route, but do I really have to fly it?
3. Rick “Mad Dog” Dubinsky: no comment necessary
4. United pilots hire F. Lee Bailey; explore buying company
5. Harry Pinson and First Boston: United’s investment bankers that structured the United ESOP deal
6. United employees (excluding flight attendants) finally buy company
7. Chuck Goldstein: ALPA in house lawyer, for accepting millions in UAL ALPA ESOP deal
8. Gene Keilen: UAL ALPA investment banker being paid $16 million in failed deal
9. Gene Keilen: UAL ALPA investment banker being paid $16 million in successful deal
10. Gerry Greenwald making himself a lame duck and cashing out nicely
11. United pilots choke the Golden Goose on the way to a bankruptcy filing
12. United files for bankruptcy protection
13. Atlantic Coast Airlines rejects reduced pay for departure from United. Transforms into Independence Air
14. Independence Air files for bankruptcy and liquidates
15. PATCO Strike and President Ronald Reagan, first major labor challenge in deregulation era
16. Frequent Flyer Programs established
17. Hub and Spoke operations become the network configuration of choice
18. Harding Lawerence
19. Frank Lorenzo and his battles at Continental and Eastern
20. Marvin Davis and hostile raids on Northwest, United and US Air (and my $400 million mistake)
21. Bill Nyrop and his open door, or “no door” policy
22. David Bonderman and the Texas Pacific Group
23. Remembering Pan Am, TWA and Eastern
24. The Regional Jet and the building of the Regional Airline industry
25. Ed Colodny for building an airline run by pilots, run for pilots
26. Robert L. Crandall and his fingerprints on nearly every marketing innovation
27. Sabre and computer reservation system bias
28. Robert L. Crandall and Howard D. Putnam (Wylie?) talking on the telephone
29. Stephen Wolf (American, Continental, Republic, Flying Tiger Line, United, US Air(ways))
30. Alfred E. Kahn
31. Michael E. Levine
32. Joe Ritchie: Chicago commodity trader actually thinking about buying Eastern Airlines
33. Senators Ted Kennedy and Howard Cannon
34. President Jimmy Carter
35. Donald Burr and PEOPLExpress
36. Lamar Muse musing that frequent flyer programs were turning flyers into a bunch of mileage junkies
37. John Peterpaul: the smartest labor leader I have ever met
38. Braniff and the first lesson on overcapacity with Flying Colors
39. Herb Kelleher: icon
40. Richard Bloch as one of the most influential industry labor arbitrators
41. Larry Seibel as one of the most influential industry labor arbitrators
42. Ron Allen and Delta’s Leadership 7.5 Program
43. Robert Six: Continental Chairman
44. Frank Borman: Eastern Airlines CEO (not as an astronaut)
45. J.J. O’Donnell: ALPA President
46. Local Service Airlines
47. Trunk Airlines
48. Steven Morrison and Cliff Winston
49. Howard Hughes and the Flying Banana
50. Dan Katz: labor lawyer making a career out of seniority integration procedures
51. Sir Richard Branson
52. Grounding of the DC-10s
53. The Bildisco Decision – significant labor win regarding bankruptcy rules
54. Gordon Bethune
55. Pattern Bargaining and cost-plus agreements
56. Frank Swaboda when the Washington Post did a good job covering the airline industry
57. Uli Derickson, TWA flight attendant and heroine
58. Victoria Frankovich, International Federation of Flight Attendants
59. Carl Icahn and TWA
60. Carl Icahn deploying a team to the Department of Labor to study underfunded pension plans
61. Texas Air Corporation: Lorenzo’s holding company
62. New York Air: first meaningful upstart threat following deregulation
63. Ionosphere Clubs: first holding bankrupt by Eastern in order to get a New York venue
64. Today’s CEO’s (Ayer, Arpey, Kellner, Anderson, Tilton, Parker) and the legacies they inherited
65. Revenue Management – the dark science
66. Jeff Shane: his lifelong commitment to liberalization and opening markets
67. Piedmont Airlines: not today's regional carrier
68. Herman the Duck: from North Central to Republic
69. Kirk Faupel, Steve Cramer, Joan Prince and the Republic folks I worked with
70. Sault Ste. Marie, MI: and the airport basement room where I did my homework while paying for college as a flight attendant
71. American flight attendant strike
72. American pilots having to pay a $45 million fine
73. Jonathan Ornstein
74. George James, Lee Howard and Jon Ash who were influential in my start
75. Jim Bennett as a #2 at Phoenix and now CEO of MWAA
76. The late Mary McCarthy: my toughest and most challenging professor
77. Andy Steinberg: best government official articulating the rigors of the business
78. Northwest/KLM alliance and its importance to today’s industry architecture
79. The Wright Amendment
80. Peter Belobaba: demonstrating that academia can be based in reality
81. Charlie Bryan: IAM leader walking Eastern Airlines into liquidation
82. The Concorde
83. Tom Plaskett: the father of the Frequent Flyer Program
84. Freddie Laker
85. Juan Trippe and the Yankee Clipper and the Pacific Clipper
86. US Civil Aeronautics Board
87. Sunset of the US Civil Aeronautics Board
88. UPS Whiteboard Guy Envy: unlike passenger airlines with a legacy past he gets to start with a clean whiteboard
89. Air Canada Pilots Association: it is tamer in the US
90. “Carrier within a Carrier” concept
91. January 18, 1991
92. December 4, 1991
93. November 30, 2001
94. “Buh Bye”: before jokes about the airline industry would be commonplace on late night TV
95. STAR, SkyTeam and oneworld global alliances
96. American – AirCal; Northwest – Republic; TWA – Ozark; Delta – Western; US Air – PSA/Piedmont; and now Delta – Northwest (to name only a few)
97. Occam’s Razor and Chitragupta for their passion and beliefs
98. The price of crude oil in 2008: from $90 per barrel to $147 to under $65 and no speculative activity?
99. The evolution of the delivery of news and commentary on this dynamic industry
100. September 11, 2001

It has been fun to look back. Next up: Looking Forward.

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Reader Comments (3)

You have been busy since the last time I dropped by, where shall we start? How about we just hit it here and there with just some random Musings on the month of October?

You will be glad to know for once you are right! Hill is on his way out but Trebor Banstetter and you read the tea leaves all wrong. Rumor is Hill won’t be seeking reelection because he has had it with the Scorched Earth Society who thinks he is to “moderate” and isn’t being tough enough on the company. Remember Hill was a “Named Defendant” in the Reno Sickout.

When the Master keeps mixing gunpowder in the Puppy Chow it later makes for some very angry and some very rabid dogs. You reap what you sow Ace. Now management will have to go from dealing with Darth Vader to dealing with the Emperor himself. The supply of even more rabid APA Presidents then the previous one is endless. From the training camps in Queens there are multiple apartments where ten guys are stacked to a bedroom. They sit on reserve for years stagnating in their seats wishing they were at home with their families but maybe, just maybe things will get better if we get a tougher guy in there to deal with Ourpay. LGA and MIA are APA breeding grounds for the Jihad.

Forty-two $100 (+) million aircraft (up to 100) that have a 20% DOC less then anything else out there will become roadside dinners in the desert and you can’t figure out why? It is because the CEO and his buddies are stuffing their wallets with the workers money, that’s why. Now if I have to explain to you why APA oppose the BA Anti-Trust agreement I have to wonder what you are doing in this business in the first place? Not only that but I might want to tap into some of that consulting money floating around because you really don’t need to know much of anything to get someone to toss you a wad of money in this industry eh!

I still want to know who do you write this stuff for or are you just so out of touch with the folks down in the trenches you think management giving themselves a 700% pay raise on the backs of the workers pay cuts is just? Not only that but each spring they come back around for millions more all the while pouring the Kool-Aid to the tune of, “Oh times are very very baaaadddd!!!” Have you read “Do The Right Thing” by ex-WN CEO Jim Parker?

Tell me what days you teach at "Jet Fuel Running Through The Veins" U because I want to audit one of your classes where you teach future MBAs how to take money out of their employee’s wallets then stuff it into their own. Before I attend class do I need to purchase the book from the bookstore, “A MBA Primer On How To Become Ethically And Morally Bankrupt, Your Mom Would Be Proud!” And we are not talking about taking money from just those malcontent pilots either, 60,000 employees of AMR fund the PUP payouts every year of 1,000 Level 8 or greater to the tune of millions and the only thing those illustrious PUP Bucks recipients have produced is the all new AAeroflot!!!! Rampers, Gate Agents, Flight Attendants, Cabin Service, Reservations, Mechanics, Pilots or to put it plainly, everyone have taken pay cuts so Ourpay & Co. can drive Maybachs and Bentleys while the workers struggle to make ends meet and put food on the table. Always remember and never forget these are the same unhappy, disgruntled, grumbling workers who brought you the “On Time Machine” under Crandall’s tutelage. The only thing that has changed around here is upper management. Do ya get the picture?

Did you see Terry Maxon’s Blog yesterday estimating AMR netting $1.197 billon for 2009?

http://aviationblog.dallasnews.com/archives/2008/11/airline-analyst-sees-strong-ai.html

Tell me how much more do we need to “Pull” before we “Win?”

For once you and I agree, the collective bargaining agreements don’t work and the Railroad Labor Agreement is an acquainted way of doing business. The airline industry needs to move forward to the more modern method of labor/management relations of when the contract expires at midnight everyone is free to seek self-help. No more dragging out contracts for years and years and years because under our new method at midnight the employees go on strike when the contract expires. Good on you for seeing it my way, you’re coming along nicely.

Ok now let us pay homage to the Patron Saint of Airline CEOs, Francisco A. Lorenzo. So he was a “misunderstood man” eh? Then I guess Jeffery Dahmer, Ted Kacznski, Charles Manson were “misunderstood” too? What was “misunderstood” other then he was deemed “unfit” to run an airline by a US Federal Judge and Barbara Walters called him “the most hated man in America.” The guy ruined tens of thousands of lives because he was “misunderstood” and then you say “today’s CEOs are now burdened with this legacy.” Do the workers at Hawaiian know you are writing this stuff or do you have filters like the Chinese do that keep them from accessing this web site from the islands?

Ahhhh yes, Stephen Wolf, another “misunderstood man.” Did you ever see his house when it was up for sale?

Click here:

http://www.thomas-talbot.com/rockhill.htm

Back in 2003 it listed for a mere $11, 950, 000. How much is enough? Where do I sign up to be "misunderstood?"

Even the Wright Amendment raised it’s ugly head this month. Can you say, “A deal is a deal?” You have to go way back in history to the original deal between the City of Fort Worth and the City of Dallas when the CAB held a shotgun marriage between the two cities and out of the union came a new bouncing airport. That’s it, end of discussion, each city signed the deal and it should still be enforced today. There has never been any restrictions on WN coming out to DFW to fly where ever they want. A deal is a deal and since when can private industry dictate public policy between two cities? If the City of Dallas had been upholding their end of the deal then currently WN should only be flying within the state of Texas out of DAL.

Can you keep a secret? I really don’t want WN to come fly out of DFW because they will clean our clocks but don’t tell the good citizens of D/FW about this. All would be better served with just one airport just like in ATL and ticket prices would plummet but like I said keep this under your hat. Ok?

Now any city that builds a new airport bulldozes the old airport because of this. Shows you what the city fathers of DEN and AUS think of this idea. Look at the basket case in New York with three airports. LGA is the “domestic” airport and JFK is the “international” airport. Want to make an international connection then it is the Cary Bus for you buddy. But, but, but what about EWR? Oh sure EWR was a dead airport until Peoples Express (aka Continental) came along and put it on life support. Now EWR siphons off traffic from both JFK and LGA. How does that lower your operating cost splitting your operations between three airports?

You mention Bob Crandall being the “Don” of the airline deregulation and then you say, “I believe that today’s CEOs are different than those in the executive suite 15, 20 or 30 years ago. Many are “agents of change” not wedded to, nor overly concerned with, the industry’s legacy past.” I’ll go with Herb’s statement that Crandall was a “Knight” and then I’ll add but Arpey is a thief. Is that what an “agents of change” are, thieves? Just like the rest of the Enron Culture of Corporate America's MBAs of today where we find ourselves on election day with two really loser candidates to choose from. The highest office in the land for the most powerful country in the world and we have to choose between these two? UGH!!!!

Read this week’s PlaneBusiness Banter? Holly is calling for the top floor of CentrePort to resign in mass. That is what it will take before the Good Ship AMR turns around. They need to take their millions and just leave. The current PUP Bucks program was hatched under Carty. Arpey had so much good will when he took over all he had to say was this was Don Carty’s idea and I’m not having this package in my administration. The workers would have rejoiced and danced in the street instead Ourpay is facing a strike by all three unions in the next 12 to 24 months. Standby for the largest static display of Boeing equipment in the history of aviation. Do you think the AFL-CIO is going to let DOL continue to drag out the APA contract with AMR for another two or three years after Obama gets in office. AFL-CIO will turn up the heat on Obama to get DOL to wrap up the APA contract before UA exchanges openers.

I’ve enjoyed reading your very slanted version of the last thirty years of which I have been a part of since I soloed in 1978. In the last thirty years I saw the KDFW airport being built, as a kid I stood in the BI KDAL terminal and watched that gold tote board spinnnnnnn around with all the different destinations and departure times. I could have stood there for hours and watch that amazing machine. I watched BI go out of business (3X), I saw the EA guys on the picket line at LGA, had a PA guy in my Queens crash pad, shared a hotel room for a month with a TI guy who wouldn’t cross the picket line while we were in new hire class at Brand X Airways. I’ve flown with guys from all the above along with airlines you never even heard of and all of them to a man just wanted a job. Nothing more and nothing less. They just wanted to go to work, do their jobs well and then go home to a house that still wasn’t paid for, kids that need braces, college funds that need funding, cars that need to be paid off etc, etc, etc. Just like you when you board a Hawaiian 767, all you want the guys to do up front is get you safely to HNL and then you can earn your pay of helping run the airline. Oh sure you can talk about getting involved with profit sharing, ESOP etc but you would make a horrible pilot and they would make an awful CEO. Imagine that, everyone pulling on the same rope at the same time in the same direction. They didn’t care what color the paint was on the side of the plane was all they wanted was a paycheck that didn’t bounce at the end of the month but I guess they don’t teach morals, ethics and values anymore, eh?

Thanks for ranking me in “The Swelbar Deregulation Index: 100 People, Companies, Concepts and Events that Have Shaped the Course of the US Airline Industry.” I’m very humble by this grand honor!

When you first cranked up this Blog I contacted one of my industry sources and asked just who is Bill Swelbar? I was told of your background and had hoped for a blog that at least reported the industry in a balanced fashion. Sometimes management wins and sometimes labor wins but at least the readers could make their own decisions. You play lose with the facts, you distort the truth and those who are not students of the airline industry could come to the wrong conclusions with your answers. Now one year later I still question your motives.

11.4.2008 | Unregistered CommenterChitragupta

Wow C

Not enough time to possibly respond to all of your issues. And you do raise some to be sure. As for the industry's fundamentals, they are making a turn and we will see just how far we can go.

I am honestly appreciative of your conviction and we will just continue to agree to disagree. It is clear that your facts are not my facts. Now go read Holly and you will feel better. Your myopic diatribes will be better rewarded somewhere else to be sure.

Thanks again for leaving the sock drawer to take a little time to read and write.

11.4.2008 | Unregistered CommenterSwelbar

If Chit is indicative of the normal American Airlines pilot then perhaps it's best for AMR to go the way of PanAm and Braniff, etc. Ignorance is bliss for some, I suppose.

11.5.2008 | Unregistered CommenterAnonymous

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