Thank you. Mike. Six minutes past 11. This is a test of the emergency alert system. Good morning, and welcome to mid-day on Minnesota Public Radio. I'm Gary eichten. We are now at the 5454 hours away from the brink negotiations continued between he can base Northwest Airlines in the 5800 Pilots at Northwest. But as you heard there are reports that a tentative agreement may be near unless there is a contract agreement. They'll reach the next 54 hours Northwest Pilots are expected to go on strike effectively shutting down the airline officials say a strike would not only inconvenience Travelers and leave many smaller communities with no air service body could have a major impact on the Region's economy. And even if there is a settlement a number of flights are expected to be cancelled this weekend today on. Midday. We're going to focus on Northwest the threaten strike in the airline industry in general are reporters are out and about they'll keep you posted and all the latest developments during the noon hour will be joined by travel expert George Wozniak. You'll be taking your specific travel questions that's coming up over. Noon hour of this first hour of the program. We're going to be taking a little broader. Look at what's happening in the airline industry will be speaking briefly with Minnesota East 8th District Congressman James Olmos star. He's the senior Democrat on the US House Transportation committee. One of the Congress is leading experts on Aviation issues. And I also joining us for the full hour. This morning is Alfred Kahn professor emeritus at Cornell University in Ithaca, New York Professor Khan was the last chairman of the old civil Aeronautics board the agency that regulated the airline industry. He was the architect of the bill that deregulated the Airlines and is often referred to as the father of deregulation. And of course we invite you to join us as well. We're talking this hour about the state of the airline industry, and we invite you to give us a call with your questions to 276 thousand is our Twin City area number to 276 thousand outside the Twin Cities one 800-242-2828. Now before we check in with congressman tobistar, who I told his own a very tight schedule this morning. Let me check very briefly here with Martin Koski at the state capitol. Anything new Martin. Will Gary. Yes, there just seemed to be some progress here. We're getting conflicting reports. But all the reports do agree on this there's progress in the negotiations between the pilots Union and the company NPR's sources talks on condition of anonymity inside Northwest Airlines says that there might be the possibility of a tentative settlement by noon today or early afternoon. However, that person is not in the negotiating room. It's hard to say exactly what's going on directly speaking, but it's it sounds like there has been of sense for a couple of days now that they've been close to an agreement. Some people say it since about Sunday. They've been closed one one person close to negotiation says Northwest Airlines has been choosing to play this out a little longer so it can get its side of the story out to the public and you may have noticed some paid advertisements in such by the airline pointing out sort of the six digit. Figure salaries at the pilot already earn some of the working conditions and sort of making their case because they're looking at other labor disputes down the pike here with other unions at Northwest Airlines and some say they didn't want to appear to Cave too quickly to the pilot. We don't know anything about the details of a tentative settlement if there is one the Department of Transportation here in Minnesota is not jumping to any conclusions. They're still assuming there's there may be a strike and they're still working on contingency plans to handle the abandoned to the stranded Travelers at the airport. The governor has taken a close interest, but he also won't comment come across and won't say anything until he's heard officially from the airline in the union that there has been a settlement of some sort. All right, Martin will keep us posted and we'll check in with you a little later. Okay? Okay, Gary parking cost at the state. Capitol Congressman James over star joins us now by phone one Congressman. Good morning Gary. It's beautiful weather up here in northern Minnesota and God's country as well. I know you have to catch a plane yourself here momentarily, but what have you have you heard anything is the strikers shuttle. It's not settled for the more. There will not be a presidential intervention. If there is not a resolution and that is important pressure on Northwest to continue negotiating rather than expecting to be bail out by a presidential emergency board. I have the Met extensively with the parties in this matter for quite some time very intensively in the last day and a half with the pilots Moschino flight attendants and other unions 33220. Are unions that are engaged in this matter the pilot said I have some very complicated matters with Northwest is not just pay and when Northwest is putting up those pilot figures, you know, there may be two or three were on the high end of that pay scale. They don't put up their own 7 a.m. And higher figure corporate executive pay numbers that that vastly exceeds any expectations that anyone would happen this company and instead of coming though. They important issue here is that the pilots the machine has the flight attendants all band together give up 886 million dollars in pay and benefits of 15% pay cut over three years the state of Minnesota help the Metropolitan airports commission provided a bridge loan Northwest Finance interest the First Trust of Boston and set Airlines at KLM. Airbus industrie all pitched in the Baylis Airline out in 1992 from a staggering blow that was complicated by the downturn in the economy in the Gulf War. It worked Northwest has had 20 consecutive quarters of profitability in each quarter. They earn more profit than the airlines earn in any one year and its entire 65 year history. Thanks to deregulation and a powerful booming economy and you would think that at this point the airline would say thanks that men and women of the Northwest the we we want to come to an agreement quickly instead. They've dragged out negotiations for 2 years and and have the frustrated all unions and the people of Minnesota travel around my District Gary. I've been astonished how many people to come up to me and said just volunteering the good comment that well we all pitch in and help that Airline the unions gave Give up paying benefits. Why can't they settle and that's the question that hangs over this agreement assuming there is an agreement now with the pilots Union. Can we look for a rerun now with the machine lyric will still be several items outstanding with The Machinist Union in part the the membership rejected the agreement brought back from the negotiations because they didn't want to see the planets get a better deal in some respects Than The Machinist it in there were a number of items that the membership felt the negotiating team had not worked hard enough on and the they want to they want to some improvements in aspect of the agreement that relate principally to work rules forced overtime which impinges on safety and there are some very serious problems there that remain Be furthered negotiated so we could be back on that the brink again conceivably once the contract is resolved that management has to come back to The Machinist and renegotiate and it will be some very tough items and in the key of those that is a matter of the overtime and Contracting out of work on balance. The one thing that's really come through crystal clear in the continuing coverage of the situation underscored over and over again is just how dominant Northwest Airlines is in this market in this Hub on balance course, that's a man that we've we've had much better are service. I suppose and then otherwise, but Fair's have been hired and we found ourselves vulnerable to this threaten strike on balance. Do you think That Northwest dominance is in this market is a good thing of the operations passengers boarding and Gates that is not conducive to a competitive atmosphere and it creates the kind of corporate arrogance that is characterized Northwest throughout this process. I hear you have the airline pilots Association in the last eight years that has negotiated 150 contracts with 50 Airlines without a single work stoppage and Northwest is the only one that's brought them right down to the brink now and I'm glad you have a great Alfred, I'd like to pay tribute to the father of deregulation man whom I greatly admired but not even Alfred Kahn could have foreseen the hub-and-spoke system of Aviation that has prevailed in deregulation in the deregulation Europe and In the hub-and-spoke concept of Aviation becomes extremely difficult for a competitor airline to come in and set up the regional service to outline communities that is necessary to compete on a grand scale with the The Fortress Hub carrier what has happened instead of you have Niche carriers of come in and and compete for a piece of that market such as Southwest which has a very unique concept and and has been very successful and competing Reno air which came into the Minneapolis-Saint Paul and offered the service to selected markets what happens in the hub-and-spoke system though is not the dominant carrier to two. Would you have the right to do to defend its Market overloads that market to to squeeze out the new competitor usually alone. New entrant carrier in the case of Reno Northwest more than doubled its service bigger aircraft frequent flyer bonuses commission over rides to travel agents and and additional incentives to Beyond markets from the Reno destination point in order to crush Rino are the Department of Transportation in her. She didn't force Northwest to limit its competition and cut cut it's reaching for stew a reasonable level. There is now a rulemaking proceeding through the department of transportation that will enhance competition in these. Congested Hub or Fortress Hub airports and offered competition to the dominant carrier. And that is a matter that I think would be very appropriate for Doctor Khan to address will be talking to him about it. Thank you so much for joining us or do I have to run off on you? But my schedule got changed at the last minute senior Democrat on the US House Transportation committee. We're talking this hour about the airline industry. And of course the continuing news story here is that apparently a tentative contract agreement has been worked out or is very close to being worked out between Northwest Airlines and the pilots Union. If in fact there is a contract agreement that would head off the threatened pilot strike that was scheduled to begin at 11 p.m. Friday evening. We will keep you posted as soon more developments occur in terms of weather that strike has been settled but meanwhile The shower we're talking with the professor Alfred Kahn professor emeritus at the Cornell University in Ithaca, New York. The last chairman of the old Seminary civil Aeronautics board the father of deregulation if he will if you'd like to join our conversation to 276 thousand is our Twin City area number to 276 Thousand Oaks. I'd the Twin City area 1 800 to +422-828-227-6001 800-242-2828 and one other reminder over the noon hour today George Wozniak who is president of Hobbit travel will be joining us to try to give us some idea. What the what a settlement or a lack of a settlement means specifically for you as a traveler. You'll have an opportunity to get your specific questions answered on that on that front, but meanwhile dresser, and thank you so much for joining us and thank you for your patience waiting here. Ava Starr noted. Did you have any clue when you push through deregulation that we were going to end up in a situation where one Airline would have such total control over specific markets? What we certainly did not Envision that we have a severe problem with monopolies. I remember being asked the question back in nineteen. I guess there's a 1978 what kind of aircraft airplane line configuration would be likely to Prevail once we'd be regulated and I said we really had no way of knowing I specifically said it's possible that we may get a situation in which the big carriers that has the the richest configuration of roots and with Hub operations may prevail it maybe instead that the most successful competitors would be the ones who did turn around point-to-point service at very low cost and I specifically mentioned Southwest Airlines and I pointed out that the only profitable operation of Eastern Airlines was a chapel which doesn't depend upon all the things that give a carrier Power and a hug On the other hand, I think it's fair to us. We have to point out that the hub-and-spoke operation has proved to be most successful because it is enormously and that was at the time I said since we don't really know is Regulators. The only thing we can do is get out of the way and let the market tell us what is the most efficient method of operation and I think it's clear important exceptions hub-and-spoke operations are extremely efficient. And at the same time they raised the kind of dilemma that the Congress Overstock converse one star Mansions subcommittee. I have a normal sad for no reason for him and would have said that even if you hadn't said the nice things about me the other is just a small point. 16 months in which we moved sharply to deregulate and my term ended and I'd late October of 78 with the passage of the deregulation act and then immediately went into the White House in another position in which I should point out of his far less successful, but the CIA after I take some for years. So there were one or two succeeding chairman after me but the major decision was made in the very week in which I moved out of this thing up faster that I think is so difficult for Outsiders to to understand is why there is so little competition at these hubs it seems as if it if you have a lucrative Market in pretty much any other business competitors will come in and try to try to take advantage of that market and yet that doesn't occur You Don't See Hearing in Minneapolis. For example, Minneapolis-Saint Paul. You don't see that United's and the the the Deltas and the Americans trying to compete with Northwest. Why is that with a sheep to be two kinds of reasons one is that in some ways a hub is almost a natural monopoly. Travelers and particularly business Travelers who have to travel on short notice and Play Separate great importance on convenience and frequency of scheduling tend to concentrate their traveling on the airline that offers them the richest selection the flights the richest number of opportunities to take to to leave Minneapolis to do their business somewhere else and then to be able to come back when they finish. So there's a very strong preference on the part of Travelers a natural preference for the airline that offers them the greatest frequency of schedules schedules lights at the widest range of choices at and that's a kind of a natural phenomenon and it's partly explains the fact that we have more and more single carrier dominated hubs Denver used to have three carriers using Denver is a hub United Frontier and continental and gradually the other two were driven out and it's Dominated by United Dallas Fort Worth and I had American and Delta and Delta has found that it's very difficult to compete with American which has the preponderance of flight and he's gradually transfer operations. And by the way, its proposed alliance with Continental with United. I'm sorry would help have other hubs without being added in an inferior position in Dallas-Fort Worth is a second set of factors. However, which are in some sense artificial back in the middle 80s Minneapolis in Detroit where both served as a hub by both Northwest and Republic which it turned around its operations and really was quite successful and when they propose to merge I among many others including the antitrust division of the US Department of Justice went to the Department of Transportation which had jurisdiction at that time and argue. That's weird. You should not be permitted because it was clearly anti-competitive that time the Depart of Transportation. I don't mind putting out to for the secretary was Elizabeth Dole was so imbued with the laissez-faire let the market do everything philosophy that it approved that burger as well as to others during that period which were opposed by the antitrust division of the Department of Justice is anti-competitive and I was very critical of the Department of that time as I was quoting Mark Twain or paraphrasing Mark Twain When I said the Department of Transportation seems never to have met emerger that it didn't like Wasn't the argument though at the time that Republic was reeling and might not be able to survive and for that matter Northwest unless it grew dramatically what I'm going to be able to survive either longer-term. What's that was an argument in point of fact, if you look at the history Republic had been a week in a week position in the early 80s, but it was widely applauded. I'm sorry that I can't remember the name of the heat. It's a chief executive officer, but I think it may have been Stephen did any of that there was a clear turn around and Republic was making money but as my initial remark suggest, it may have been that it would not have been able to survive that Travelers would have gravitated to the carrier that was able to offer the richest schedule. But at least when we The applicable laws become more important when you no longer have direct regulations protect consumers. The theory of deregulation is that the competitive market will protect them and is no circumstances has become really important just one last night that in addition the disappearances of the number to win. The number three carriers at those hugs are the consequence of certain competitive tactics that were adopted by The Hub dominating carriers frequent flyer credits for $0.01 a brilliant marketing Innovation tends to give a very great advantage to the dominant carrier because The Travelers including the business Travelers who pay the full fare or disproportionate amount of pay the full fare like the concentrate their travel on a single carrier because it's better to have a hundred thousand miles on a single carrier. How's it going out for carriers? So it gives an artificial advantage to the hub dominating carrier to travel agents. Would you have the effect of giving them specially strong incentives to concentrate all their business on a single carrier. I want to calculated that according to some of those schedules the conditions which were then running 10% of the ticket price on average. But when a travel agent gave the dominating carrier additional schedules additional passengers over and above what would be expected to be its normal share the market they would on that additional business get 35 to 40% commissions which independent simply couldn't compete with so it's been a combination of natural monopolies factors which make Flights it can therefore it gives people at that on the spot with spokes additional destination destinations fire the Hogs that they couldn't have if you didn't have it also permitted to use bigger planes at the field of place better there a natural monopoly factors. There are also artificial factors that some of which could have been prevented by the antitrust laws Alfred Kahn is our guest this our professor emeritus at Cornell University in Ithaca New York former chairman of the Civil Aeronautics board often called the father of Airline deregulation were talking to sour about the airline industry. Of course, the big news apparently a tentative contract agreement has either been worked out or is close to being worked out between Northwest Airlines and the Northwest Pilots Union if such an agreement is reached that would head off a threaten strike. That's so scheduled to begin at 11 p.m. Friday night. However, apparently a some flights are still going to be cancelled or or delayed and will have all that information or through the through to one here on our mid-day program over the noon hour today George Wozniak travel expert will be joining us will have continuing reports from our reporters in the field. So we hope you'll be able to stay too. And if you'd like to call in and got a question for Professor con about the airline industry number to call is227 6000 to 276 thousand outside the Twin Cities 1-800. 242-282-8227 6001 800-242-2828 and we'll get to our first caller in just a moment. The cows await the milkshakes are called in. The french fries are hot. It's Minnesota State Fair time starting August 27th in Minnesota Public Radio. Is there live at the fair join us at the corner of Judson and Nelson and you'll meet some of your favorite NPR host and see how a radio show is done for more information on skin. Minnesota Public Radio at the fair visit our website www.mpr.org will be out at the fair tomorrow at 11 to 1 and we sure hope you'll be able to stop by today is programming is made possible in part by The Advocates Minnesota Public Radio contributors include General Mills foundation in the Dayton Hudson foundation on behalf of Dayton's Mervyn's and Target stores for Arts and Cultural programming quick. Look at the weather forecast generally sunny skies. Maybe you some showers and thundershowers along the Canadian border. But otherwise sunny skies on his mid-seventies in the Northeast upper 80s in the southwest sunny in the Twin Cities through the afternoon with a high in the low to mid-80s right now. It's sunny and 77 in the Twin Cities. I guess this hour is a professor Alfred Kahn the father of Airline deregulation as we talked about the airline industry this hour on our mid-day program and Ron's on the line with the Comic Collector. Yeah Professor office broad, but I work there for 20 years and was going to be our contract maintenance end of it and for numerous years a contract find supported Eastern Airlines during their trying to struggle. So I know the snow for fact that that's not really true what you were saying to me guys for that. But the main issue here is when you set this deregulation program into effect did you know the devastation it was going to take for the industry call the China Singapore. The level of maintenance is being accomplished. There isn't as good as it is back here the homestake how you feel with that affects the industry and safety out there. I'll let me take a moment at a time and I'll try to be brief. So if you want to come back, please feel free to do so clearly oversimplified. If I said the only operation that it was no question. My Economist staff told me either. When we were there at the shuttle was the most profitable part of the operation and the fact that Eastern struggling even under regulation is clearly suggested by the fact that when President Carter offered me the chairmanship of the Civil Aeronautics board with a general understanding that I was interested in introducing more competition and deregulating I said to him are you prepared for the possibility that if we go and deregulate and have more competition Eastern Airlines or PanAm May well go belly-up. I said that at the time and I wasn't a particular expert on the airline industry. Now the only respect in which my crystal ball is cloudy was what I said Eastern Airlines It turned out of course, they both of them were driven out a lot of money for the because it was the most profitable operation your second question. And I never doubted the fact that the industry the airline industry like regulation and they were the principal Advocates of Regulation because it protected them from competition and that's a matter of record. The only major a company that came over on the side of deregulation was United because under regulation didn't because it was the biggest carrier it never got any of the root Awards. Finally United said, well then if you're if you're going to handicap is constantly then get the hell out of our way. Should we go back to that old regulated system. I mean service certainly was better at that time. It seems like a Now it's become more of a cattle car operation that used to be at least theoretically a nicer experience to fly in an airplane. And should we go back to a regulated environment? I think I can answer that pretty quickly. The main purpose of the regulation was to bring two people of modest means to make air travel affordable for them and that it has certainly done. We better than normal amount of the increase of travel people of modest income can get discount fares last year 93% of all mileage was a discount fares at the average discount with 69% below the unrestricted Fair level. Now, there's no question that travel was more pleasant before you pay the people who could afford it paid to travel they had empty seats next to them. They could put their hat on that seat and the chairman of the Federal Trade Someone said the business traveler was so happy to have an empty seat next to him to put his hat on wouldn't be so happy. If you knew we were paying for that seat to what we wanted people to have a choice of necessarily more crowded less comfortable more congested travel longer lines at the economy rates and the other hand. We wanted people who are willing to pay for the comfort to be able to get that now that the second for a long time disappeared. But now when my travel is paid for by somebody else and I don't travel in the cattle car. I have a separate line at the counter I get automatically upgraded to First Class. I have the same comfortable travel as we used but that's what a competitive market. Does it offers people that choice. They never had that choice before and the response of Travelers the overwhelming response. The result is of course that averaged Plains now are filled not 52% as they were before deregulation. But 70% last year. He fares given that intense competitive environment are is it a safe to fly today as it was under the regulated in the environment accident statistics and accident rates, which had been declining under regulation continue that decline for at least the first decade of the deregulation and have sort of plateaued out at 11 very very markedly below the Preeti regulation level. I'm not saying that's because of deregulation. It's clearly because of improved technological progress in the directions safety, but the accident rates in no way. They're out any supposition that traveling has become less safe. It is clearly see For now that it was under regulation for over by taking people out of cars and putting them in airplanes. It is clearly saved thousands of lies and that's a serious statement because she is the most dangerous part of your trip is when you're in the car or when you go by Drive long distance by car and people now go onto airplanes the final answer. We never intended it to deregulate safety. I went over to the FAA will have to increase your scrutiny of operations to resist any Temptation that carriers under the pressure of Kai price competition with cut Corners guy your question for professor. I'm really I really appreciate mr. Khan's in-depth discussion of how this hub-and-spoke system works. But you know, I really find it difficult to believe that no one could foresee. Some tactic would arise by which carriers would monopolize markets. When is copious Senate hearings were going on scrutinizing the deregulation processor. Don't don't you think that the airlines had some inkling of this hub-and-spoke system at the time. They were going to the Senate hearings in these discussions. I'll hang up and listen regulation had the most thoroughly developed National system in which it could feed itself traffic from what later we recognized spokes to a hub to a center area of operation and then be able to control that traffic. It was simply that nobody could be Delta which it was had already developed the Hub and spoke operation around Atlanta. And you may remember that far back the people are already saying that it when people in the Southeast died and went to hell they had to make a stop at that land at first. So I eventually came to feel that they might do better under deregulation than under regulation and it happened after I get in the office about nine months that American Airlines which is been a violent opponents under Bob Crandall as well as al-qaisi of deregulation turn around entirely and said, if you're not going to protect us from competition then get the hell out of our way and that's one of the reasons that the regulation went much faster and farther than I had originally thought it would go but it's it all Industries if this gets back partly to the first question. Is a very hard Taskmaster it it puts very great pressure on supplying companies to be efficient to configure their operations in which ways to minimize cost and to improve service because of they don't they were eliminated. It's a much easier life when you're protected from competition when for the entire 40 Years of the history of the Civil Aeronautics board with one exception the board never certificated a totally new carrier to come in and compete with the incumbent carriers, even though people were knocking at the doors and trying to do that. So there's no question that competition is tougher. It creates turmoil put greater pressure on airlines is it is now a greater danger of bankruptcy than before but by the same token, it forces them to perform better in the public interest against the possibility that they will abused their position and exert. Engaging in unfair competition and I regard those override commissions that I described when they say if you take it give it to give us 50% of your business. Your commission is 10% if he has 55% of your business, your commission will go up to 11% on everybody which means for the additional 5% Your commission is maybe 30 to 40% that should have been attacked them to the end of the trust laws. And finally I I concur in some degree with a person over Stars statement that we probably have had some predatory pricing in the industry in which when a competitive challenges the incumbent, it reduces its fares 50 60 70 per-cent and in some instances increases, the number of discount seats that it offers is one instance cited by the Department of Transportation on a particular route where the airline offers fewer than a thousand Dick's discount seats until the competitive came in then in one quarter of the year it offered 50,000. The competitive has been driven out and the number of discount seats at the incumbent that offered went down below a thousand in Greater depth, but that kind of pinpointed discriminatory sharpshooting. That's what the other just loves her supposed to prevent. Russian Alfred Kahn is our guests this our professor emeritus at Cornell University former chairman of the Civil Aeronautics board, the father of Airline deregulation were talking to sour about the airline industry next hour or going to be focusing specifically on the situation here at Northwest Airlines. You're in the Twin City area will be joined by travel expert by George Wozniak. If you just tuned in there are rumors afloat that a tentative contract agreement has been reached or is very close to being reached between Northwest Airlines and it's Pilots Union that would head off the threatened Pilots strike, which is scheduled to begin at 11. The evening now Northwest is holding a news conference even as we speak, and it's announced that its canceling 170 of its flights are scheduled for Friday and 230 flights that were scheduled for Saturday 170 on Friday 230 on Saturday, and the airline says that those flights will be cancelled. Even if the pilot strike is averted. So we'll have more information on that and will keep you posted on strike developments. So throughout their midday program today again right now. If you'd like to call in with a question for pressure can give us a call to 276 thousand is our Twin City area number to 276 Thousand Oaks had the Twin Cities 1-800. 242-282-8227 6001 800-242-2828. Wayne go ahead place. Northwest Airlines and over the last three decades this area metropolitan area is growing 15% per decade on average all three decades even trivia yet since deregulation are airport here, which is an international airport has seen its boardings flattened affect decrease a bit the three Airlines we had are now down to basically one we get turboprop from another airline that Northwest got everything. So there's a proximately Liberate the two counties over a hundred thousand I see other than four people live going from New York to Orlando, Florida to go to Disney World or other resort areas from major Metro areas. Everybody else in the countries basically paid a premium the people in the Twin Cities Pain over price. Even though they got a lot of choices, but it's all is one here, like basically got it and I think we have to break some of this up. What is Leia Prospect Professor con that are the current Arrangement is going to be changed like Fargo has only two Airlines. Yes that and the Fortress Hub situation that we that we experience on the outcome of the Department of Transportation rulemaking that Congressman over star referred to but I do think it's extremely important the problem to which that. She is now belatedly addressing itself, which is when people in a area like Fargo have for service or inadequate service if if that is the case and particularly when the charges to people who have to travel at the last moment and can't afford to stay over a weekend Skyrocket. I don't want to be here to hyperbolic about that. But those where is average fairs since T regulations come in have declined about 39% in real terms that is adjusted for inflation. Unrestricted fairs have gone up about 70% when in those circumstances and maybe using turbo pops, by the way or even piston and comes in and says, we'll look I can serve those people making it affect discount fares available and when in losartan and that's the way of free market works and went in those circumstances that carrier that's already there which has this great operations comes down just in that particular place and reduces its Fair 60% meets the new one on the nose just long enough to drive it out of business, by the way. They don't always When that happens and then the moment that interest goes out the fares go right back up to the previous level and then you can ask yourself in those circumstances said it is any other idiot that I can compete with him knowing that that's what's in store. Well, then I think the government does have an obligation under the antitrust laws or. Something like that petition is not suppressed in that way. I'm not sure. Why is it that I guess they caught her argument here is that these smaller airlines are the new entrance in many instances are poorly managed undercapitalized. How is it that Southwest Airlines has managed to thrive in this environment? First you're perfectly right small businesses in any field of endeavor that you can name have a very high failure rate for for the kinds of reasons to mention as I don't have any doubt that a lot of the airlines that have gone out of business the 30-40 in the last few years of come in and God did not have a good management or a good operating plan or were inadequately capitalized and so on Southwest. I wish it were not so but seems almost to be unique in its extraordinary efficiency. It pays very high going wages. They have excellent labor relations. They that you was a single kind of aircraft or something like that. So as to minimize maintenance cost they do this just the opposite operation from The Hobbit spoke. They do point to point. They turn those plans around and 15 minutes as I understand that you don't don't even get tickets or boy. I'm not even sure that you can make reservations in advance. It is a it is a very stripped-down operation wonderfully efficient and it has the extraordinary attractive is that they can offer low fares doesn't have instructed these days, but rather with the people who are trying to operate in the market percent of the total business and anybody who tries to fight with Southwest in the way that I've described fighting with these other entrance knows that it's just as likely to drive itself out of business Southwest. The problem of public policy is to differentiate the cases in which the entrance don't really deserve to survive from the cases in which they could vert. Well survive, but for the fact that they're being subjected to this kind of discriminatory sharp shooting in which the incumbent comes down sharply and heavily flood the market with new capacity increases its offer discount fares, and then they won't disappear the moment. They drive them out. It's not an easy thing to do, but that's not a healthy competitive situation. I guess when I was getting at was North what are Southwest somehow managed to to survive and thrive in that environment shouldn't we assume that it bothers can't they're just not good enough for did Southwest have some special Arrangement or some special situation that allowed them to to grow. Well, I think it's both Southwest Doug didn't have the advantage for until now of being the only carrier that could operate out of Love Field. What is Spurs and made its Fortune operating Out of Love Field? Where is the Wright Amendment passed at the instance of congressmen right under pressure Dallas-Fort Worth required all other carriers to operate out of the Dallas-Fort Worth Airport. Love Field is very close to Dallas and therefore very convenient. So Southwest this very frequent shuttle service between on a very dense valuable route between Dallas and Houston and was able to make a lot of money on that and it has picked and chosen its place has similarly on the west coast with it shoveled fare between San Francisco and Los Angeles got to outrageous levels various as I recalled one way of $230 or so Southwest didn't come in directly San Francisco to Los Angeles International, but putting flights Oakland to John Wayne Orange County airport. Are Los Angeles but it came at a 60 + $70 fares and now it's it's put up a hub in Providence, Rhode Island not Boston, but near enough to siphon off the Trap people are willing to travel the 50 miles or so to get from the southern area Boston. Now, it's put a hub up in Manchester Vermont to take people take people from the north end up lost. It picks and chooses Its Spots so is part it has operated very kind of lie, very efficiently and now is capitalized enough so that it has enough consumer acceptance and it's very difficult has made it. I think close to impossible for anybody to come in weather efficient or inefficient. It's hard to do justice to the complexity of it and the consideration you raised are clearly relevant and we don't want to be protecting pinpointed temporary response that gives customers the benefits of competition only for a very short. Of time and then merely reinforces the whole panoply after that scary for the entrance are driven out. A lot of time left, but let's get at least one more caller on the line wreck. Hi, Miss, How are you? I was just calling some of the same things that's on the other callers and said it it really seems to me what the government has done here is just created five or six or seven just monopolies. Give me a quick example II very recently had to fly to Dallas at the last minute and the last-minute airfare from Minneapolis to Dallas on Northwest was $1,370. I don't even want to hear it and and the top there was there was no competition. I called every other airline that flies from Minneapolis to Dallas and there wasn't a $5 difference between shares and yet it and it just it just seems to me like what we've done is we've just created Five monopolies. Well, I think we have to have a sense of balance about this 93% of all travelers last year travel to Discount fares. The average discount would have been 63 69% below that outrageous. Deregulation has introduced genuine competition and it has been genuinely beneficial to the tune the best estimates. I know of 10 to 12 billion dollars a year Travelers have saved but it has been really tough on this people in your position. The same thing happened to me when I was going to go down to Washington at the invitation to the Secretary of Transportation to talk about the proposed new rules last minute. I couldn't stay over weekend. They quoted me Affair of 600. The normal fare was $616 round trip. If I go to Washington, that's worse than yours are the mileage bases. Its over a dollar a mile. Some people say well we got to go back at least put ceilings on the Stop Those really extreme, right? I wish there were time to go into how extraordinary difficult that would be and how it is really more costly for Airlines to save seats for people who want to get be able to make reservations the last moment but I agree that that situation for that less than 5% of Travis is not satisfactory the system that is most consistent with the philosophy of the free market regulation is to make sure that those markets are free entry. I'm sure your people would come in and say I can serve that Market at 3 or $400 round-trip, but I can't if the minute I do that the incumbent Airlines immediately goes down to $300 and enormously increases its schedules until it dries me out. So was the first recorded So, I think it's been Scott to be to some sort of antitrust preservation. Before we go at one last question for you in terms of I guess regulating the market through Marketplace pressure in that context do consumers have some obligation hear it if in fact they're faced with a new entrant comes into the market. Let's say here in the Twin City area and offers a low-fare Northwest with its dominance matches. That fair do consumers have some have to take some responsibility to hear themselves and say well if if I don't fly that new guy, we're going to end up right back where we were Weather at individual consumers or a community some communities are coming in and offering guaranteed income for some. Of time and don't remember as of tomorrow who it was the front of the slopes fairs and what will happen to those little fears if they ignore that just say well I'd like to get my frequent flyer credit. So I agree with you. I think some initiative on the part of consumers or loyalty on the part of consumers or initiatives on the part of the localities, maybe one way of preserving those options that prove under the present system often to be temporary. Thank you so much for joining us. Are we really appreciate this at Cornell University in Ithaca New York the father of Airline deregulation joining us this first hour of our midday program our Focus this hour is on the airline industry specifically. The situation at Northwest in case you're just tuning in apparently a tentative agreement tentative contract agreement has either been worked out or is very close to being worked out between Northwest in the pilots Union. If there is an agreement that of course would head off the threatened pilot strike that scheduled to begin Friday night at 11 second Oliver. Midday program. We're going to hear from our reporters get the latest information. George Wozniak will be here with travel tips as well.