Most Of All, Kellner Wants Revamped Railway Labor Act

In a recent interview with Houston Chronicle business columnist Loren Steffy, Continental CEO Larry Kellner came right out and said what many of his counterparts in the US airline industry may be thinking to themselves. With the government stepping in to regulate the banking industry... why not increase regulation of US airlines?

"If the government wanted to re-regulate the business, I wouldn't be opposed to it," Kellner said, in a comment Steffy called "stunning." But while the fact Kellner went on record in saying so is noteworthy, the idea that large airlines may actually favor some form of re-regulation is not really surprising.

Before the industry was deregulated in 1978, the government dictated which airlines could serve domestic routes, in much the same way the Transportation Department now governs the awarding of certain foreign routes. While airlines complained then of an overly-strict government bureaucracy, regulation also essentially eliminated route competition among airlines, and allowed carriers to charge much higher fares than they often can today.

Given that most US airlines currently operate at heavy losses -- and are barely profitable even in the best of times -- it's not hard, perhaps, to see why Kellner may wish to return to those comparatively halcyon days, though Steffy notes Kellner's statements marked "...the first time in more than two decades of covering airlines that I've heard an executive pine for more regulation."

Kellner carefully stated he doesn't want a wholesale return to those days, per se... but he does approve of a change to the current method of doing business, with airlines continuously slashing fares to match the competition.

"What we've got today doesn't work," Kellner said. "It isn't creating a stable industry."

Kellner also expressed his desire for controls on the two greatest factors affecting profit margins: fuel prices, and labor costs. In regards to the latter, Kellner proposes a thorough revamp of the Railway Labor Act. That's the 1930s-era piece of legislation that continues to dictate the labor contract negotiation process to this day, and often results in contentious labor talks, federal mediation and even strikes.

"The problem is the structure of the RLA creates a very cumbersome process," Kellner said. "It hasn't worked well since deregulation. It creates a tremendous amount of angst on both sides."

Previous attempts to change the Act have failed on Congress, the Chronicle notes, and few lawmakers seem particularly interested in changing it now.

FMI: www.continental.com