An opinion piece in the Wall Street Journal written by former Continental Airlines CEO Frank Lorenzo laments that the Biden Administration and Pete Buttigieg’s Transportation Department (DOT) threaten to ruin the airline industry with unnecessary regulation. Let’s take a look at his arguments.
Former Continental CEO Frank Lorenzo Thinks Biden And Buttigieg Are Adversly “Reregulating” The US Airline Industry
Lorenzo was chief at Continental Airlines from 1972 to 1990, which included the last year of “regulation” before the passage of The Airline Deregulation Act of 1978, which fundamentally transformed the aviation industry in North America by removing the power of the cartel-like Civil Aeronautics Board to set prices and routes.
You may want to read his entire article first, but I will quote and comment on key passages below.
“The regulatory pendulum in Washington is now swinging in the opposite direction, and airlines are bearing the brunt. President Biden’s public crusade against “junk fees” and demonization of the industry, along with the lobbying efforts of groups like FlyersRights.org and Travelers United, are driving new and unnecessary rules.”
Is there really a problem with opposing so-called junk fees? Is that not a bipartisan issue? Inherent in our conception of junk fees is not only that they exist, but that they are often hidden and therefore deceptive. At a minimum, I hope Lorenzo and all readers are in favor of clear transparency for all fees that may be associated with an airline ticket.
The Biden administration has designated the following as “junk” fees:
- first or second checked bag
- carry-on bag
- canceling a reservation
- changing a reservation
Buttigieg said, “Airlines should compete with one another to secure passengers’ business—not to see who can charge the most in surprise fees.” The DOT argues its crackdown on junk fees will create “a competitive airline market by ensuring that consumers have the information they need to better understand the true costs of air travel.”
But Lorenzo doesn’t think so.
“This higher standard is hard to defend. Should Amazon be required to show shipping costs on every item-description page? The Transportation Department hasn’t shown that consumers lack sufficient information about airline fees. On the contrary, consumers can easily see what they’re expected to pay at every step of the purchasing process.”
Is that true? Is that a reasonable analogy? Because most people need to take a bag with them when they travel. And most people may reasonably think that changing or canceling a reservation won’t cost them as much as the ticket itself. It’s not about prohibiting these fees, but simply making them transparent.
“In any case, why are airline fees regulated by unelected bureaucrats? If voters support mandatory fee transparency, why doesn’t Congress legislate it?”
That’s a fair question, but without getting into a verbose discussion on Chevron Deference post Loper Bright and Administrative State, Congress has delegated this power to federal agencies. Until such delegation is ruled unconstitutional and the problem of our huge Congressional districts and the lack of time for 535 representatives to develop immense subjet-matter experience is addressed, I’m all right with civil servants looking out for transparency.
“The most absurd Transportation Department regulation in recent memory was a mandate, repealed in late 2020, allowing passengers to bring “emotional support animals” aboard. Unsurprisingly, passengers began finding comfort in a range of critters, including rabbits, peacocks and even pigs.”
Amen…
But the DOT fixed it. Hopefully, it will also close the “Psychiatric Service Animal” loophole as well.
“Secretary Pete Buttigieg’s Transportation Department isn’t finished: It now proposes European Union-style cash compensation and amenities for delayed flights, regardless of whether the airline could control the delay. It also wants to prohibit fees for parents and children to sit together during the flight. While this reform is a political crowd-pleaser, should parents be a protected class when accompanied by children but unprotected when they aren’t?”
That’s misleading. The Biden Administration is not calling on airlines to issue cash payments for delays outside o its control, like bad weather or terrorism. But yes, for delays and cancellations within the carrier’s control, including mechanical issues, I think a compensation system would keep carriers much more accountable and lead to more on-time arrivals.
“Airlines have thrived since deregulation by providing different service levels at various prices. But they are increasingly required to provide one-size-fits-all service instead of letting consumers decide what they will and won’t pay for, which reduces carriers’ ability to differentiate their offerings.”
I am sympathetic to this argument…to an extent…but there are certain minimum thresholds that no one should be allowed to compromise on…like safety or fare transparency. You want to operate in the US? Great, but you’re not going to mislead consumers or cut safety corners.
“While comfortable for passengers, minimum seat and lavatory sizes decrease the number of seats an airline can sell and stifle passenger friendly innovation…In an industry where capacity is constrained by the limited availability of planes, pilots and mechanics, this will push fares even higher.”
I am against both minimum seat and lavatory sizes in theory…but when the rubber hits the road, how do you address the very real safety concerns of evacuating a plane when so many Americans have become so obese they cannot safely ingress and degree from their seats? Any seat pitch below 28 inches is simply not workable…it becomes a latent danger. And is it really too much to ask to require airlines to offer a lavatory big enough so that one can turn around in it, especially for those who may be genuinely disabled and not just too cheap to pay for priority boarding?
“Deregulation delivered the modern miracle of affordable air travel to two generations of Americans. It would be a shame if politicians and unelected bureaucrats took it away from future generations, one needless rule at a time.”
Agreed again…but I’m not seeing the “needless rules” here.
Take the proposed rule of guaranteeing that families are not separated onboard. It’s easy to say, “Well if you want to sit together, check the seat map and pre-reserve your seats. If you want to sit together, take a different flight if there are no more seats together.” While that’s not illogical, why do we accept as valid that a family that purchases tickets on a flight can find their young children separated? Until airlines develop systems to block sales of tickets if there is no way to keep families together, an airline should not transfer that reasonable expectation onto other passengers onboard. Because you know darn well that a four-year-old is not going to be left in row 35 while her parents chill in row 12….
I’ll stop here…but I’m curious what you think about Lorenzo’s argument and whether there is a disconnect between his reasonable aversion to over-regulation versus the (arguably) light-handed regulations of the Biden administration over the last few years.
What’s next, an op-ed from an ex hotel company CEO railing against government mandated disclosure of resort fees? 😉
Problem is that the airline industry historically has not been particularly consumer friendly and seems to go out of their way to screw customers in the absence of government regulation. I don’t think Frank is going to have many supporters here, aside from airline execs
Never been a cheerleader for Frank . Problem is the airlines have become a sort Greed Bus Service with too many flights , too many entitled passengers , and too many revenue enhancing extra charges .
People demand that the government do something to protect consumers because, in the “too big to fail” environment, consumers feel like that’s the only way that they can truly be treated with dignity and respect, even when all passengers are respectful to each other on a plane (which happens 99.9% of the time).
It’s just so fascinating to me that airlines think they can take hundreds and thousands of dollars and not be expected to deliver the product they promise. If my flight is 6 hours late, they should have to compensate me with something! Their whole shtick is flying somewhere on time! The fact that they push their schedules to the limit (which is entirely defensible for a money-making enterprise) is not really my problem…particularly when choice, for most passengers, is really an illusion in the airline industry.
If your flight is 6 hours late , you ought to thank your lucky stars that the airline carried you safely . If your bags are lost , you should thank your lucky stars that your items can be replaced . If Trump is elected , you should thank your lucky stars that Brandon is going to be gone .
You can always tell the children… they are the ones who use silly nicknames. Take this case in point.
Give it a rest friend. You must be so tired, and bored with only ever visiting this website.
Alert, The non sequiturs ruin the discussions. Without being unkind, I ask you to consider others.
@Maryland … the commenter said that if his flight is 6 hours late , he ought to be compensated .
@Alert replied that if his flight is 6 hours late , he should thank his lucky stars that the airline delivered him safely .
I don’t see the non-sequitur .
Really alert. Your brandon and later Coolidge comments are your typical way of hijacking any discussion. You are a troll.
I suspect, though don’t know, that Alert has Asperger’s, like Tim Dunn.
Nah, Alert is just a bigot and troll. No need to make excuses for him.
@Matthew … Good guess on Asperger’s … except has wide interests ( not narrow ) , and a historically full social life (not limited ) . Look for @Alert at the Spectator summer garden party at 22 Old Queen Street in London , chatting and quaffing .
Of all the people in the world, Frank Lorenzo carping about government regulation of airlines. In 1994, the DOT declared him “unfit” to run an airline.
I live in MSY, which was severely impacted when Frank raided Texas International, mangled Continental, and destroyed Eastern. Based strictly on an IOU, he stole the Eastern SystemOne reservations system and transferred it to Continental. What a huckster!!!
Many locals found themselves unemployed via his heavy handed tactics and mismanagement.
Excuse me as I spit on the ground!!!
I don’t believe CO ever used SystemOne. CO used SHARES.
As per an Aviation Week article dated April 28, 1995, Continental sold its System One computer reservations system to the European CRS company Amadeus Global Travel Distribution for cash and a 12.4% stake in Amadeus. Continental acquired SystemOne from Eastern via Mr Lorenzo.
This is undeniable proof that cockroaches never die.
LOL my main takeaway from the post was “Frank Lorenzo is still alive???”
exactly… can’t believe that b*stard is still kicking… must be older than dirt by now.
A rant from a grumpy curmudgeon that cannot accept things evolve and we make change as necessary.
“make change as necessary” … except , since Calvin Coolidge , all change has been destructive and wicked .
Economically , the Gold Standard was far more stable than the Federal Reserve . Internationally , the British Empire was far more stable than the current rascal chest-thumper shouters . Domestically , the Three Rs and proper male-female relationships were far more stable than rap-music speech and the multitude of gender-feelings . Transportation was far more stable with trains and steamships , than today’s air-bus service .
Bring back the days of Calvin Coolidge , I say .
That’s a bit of broad brush, Alert.
@Matthew … Speaking of brushes , The New Yorker Magazine cover art from the 1920s and 1930s were witty and droll .
As was the discourse between men and women . If one compares the Coolidge period with the modern era , discourse been all downhill . When Coolidge died , Dorothy Parker asked : “How can they tell ?”
We have regressed into the lowest pits with the vile rap-music-speech .
Yeah, the days of slavery and treating women like second class citizens were just so much better.
I was just saying the other day that I really enjoyed airline travel back when Calvin Coolidge was our president. It’s really gone downhill since the Hoover administration.
I blame that pesky FDR! 😉
Lorenzo? Really? The expert in running airlines into the ground, To name just a few, NYAir, Continental, Eastern,….and then there are those he looted before bankrupting them, PeopleExpress, Frontier.
And we are going to listen to him on anything about airlines , regulations, or service…..Plain hogwash. It is laughable that it even got printed.
Not even to mention Union busting….
Not sure who said it first, but “every industry gets the regulation it deserves”. If the airlines clean up their act sufficiently, the govt will move on to other arenas
JetBlue is going to collapse because of Biden.
In Canada, if you want to sit by your travel partner, you have to either buy a nearly full fare or pay for seat assignments. Air Canada and Westjet are like that.
I voted for Biden, and I’m voting for Kalama, but I agree with you on this point. I really don’t understand how customers, let alone B6, are better off after the AA/B6 deal was killed. Not allowing the NK merger was just a nail in the coffin.
Never been a regulation the dems did not like . In dem town , everything is forbidden , including that which is permitted , as Elon Musk is discovering .
Spirit has grown tremendously over the years and pivoted to new models while Jet Blue has been unable to expand. Jet Blue has bad management to blame. Maybe if Jet Blue had focused on developing a partnership with Alaska similar to how America West and Continental helped each other out, they would be much better today. It was a dumb decision for Jet Blue to waste resources on Spirit since they control so many gates in airports that have finite gate space.
The way I see it is that JetBlue’s early, core strengths seem to have become a crutch that stopped them from becoming more and then those strengths turned out to make them less than they could have been. They seem to have had a problem with breaking out sufficiently from the point-to-point service model and thereby failed to become a true network carrier — despite the huge advantages it had as a big player at JFK — with the frequency needed to deliver more reliably. Too much scope too thin across the scope, and a bit too much NY O&D-oriented at that too. Now perhaps it’s too late to change the game with DL so dominant at JFK and JetBlue late to the game of major multilateral airline alliance membership.
If the demise of B6 is because of Biden, I’m going to recommend him to the Vatican for sainthood after he passes. Any of the works of Neelzebub must be destroyed with everything Biblical in destructive nature. And I want this done to hurt all of the Noo Yawk Yankers and Massholes who make up the customer base of this abomination of an airline. You deserve it, scumbags.
I’m sure he’ll find an audience of support in WSJ readers, but what he says is not at all popular, and I’m sure no current airline CEO would go on the record to agree with him, even if they might do so in private.
Says the man that ruined both Continental and Eastern. He’s the last one to voice an opinion
I am not a big supporter of government regulation of airlines other than for safety. That said, implementing European style compensation rules would not, IMHO, affect US airlines bootom line. Just like everything else, they’d price it in. You get a better compensation if you’re downgraded, for example, but you’ll pay a higher fare. And what would happen if they fixed the different excise tax effect on air fares versus baggage fees?
On an inflation-adjusted basis I pay less for my intra-Europe flights on legacy major carriers in Europe nowadays than before EC 261/2004. And I don’t see any good reason to attribute that fare dynamic to the following: when it comes to events actionable under EC 261/2004, most passengers who have a right to a claim fail to adequately pursue a claim under EC 261/2004 to collect per the rights under EC 261/2004.
How about bringing back an extra FA to provide proper Polaris service, Frank?
We know it is still your airline given how you blocked Bethune from coming back a few years ago (of course, Bethune wanted $misek)
Personally, I’m in favor of re-regulation. Whatever it takes to keep the white trash out of the skies and Greyhounders At Heart from taking to the skies, I’m for it. Whatever it takes to take down financially unsound airlines, especially B6, I’m for it. And if Frank Lorenzo is against it, I am so for it it actually hurts.
Congratulations Matthew. Only here do comments go above and beyond the initial subject to include Calvin Coolidge, Herbert Hoover, FDR, and…yes, even rap music. Nice job today, lol.
@DavidM … just like any civilized conversation in any coffee restaurant .
Yeah alert, that coffee shop discussion only happens when you are with the biggest clown in town.
@Maryland … @Alert says his coffee restaurant discussions occur with a variety of people , each of whom has something to offer . Like the Round Table at the Algonquin , perhaps ?
Dear alert, as Dorothy Parker may have said, you add nothing to these discussions so don’t sit next to me.
@Maryland … Dorothy MAY NOT have said such a restricting rule . She did , after all , contribute to desegregation .
Given Lorenzo’s history and WSJ’s own bias, I will take his words as a grain of salt. Secretary Pete has been an excellent advocate for passengers but more needs to be done. When I only get a $20 credit when Breeze downgraded my Ascent(premium) seat to an extra legroom seat (plane swap from A220 to E195) the night before, I think I should be compensated with cash, not credits. Not to mention $20 is a low ball! Under EU passenger bill of rights, I will be given more. The problem with the airline industry is that they are greedy. While they want all of us to share their burden during tough time, they only want more bonus when things are good. Flying in post Covid is even less desirable than before. Covid is used an excuse to cut everything.
Let’s be honest and we won’t go back to pre-de-regulation period, but I want an even stronger passenger bill of rights. Air fares are higher and I am getting less. I want to be protected when airlines cancel a flight because of mechanical reasons. There is a reason why you have spare airplanes. I should not be the one booking back-up flights. Baggage fees and all these other fees are fine but you need to disclose them early. I want tax and fee to be included on the fares when I search for flights.
Emotional support animals are legitimate concerns and they should occupy their own seats. Maybe there should be a compromise between airlines and government agencies. These folks will get a discount on the second ticket for their emotional support animals, and if we are serious about it, we can have a strict licensing system. Just like we go to DMV for a driver license, these dogs will be certified by a serious vet doctor. Once they get a license, these passengers will get a discount on his or her tickets with a second seat for their emotional support animals. Trust me that we will have no outcry once these animals get their own seats and not intruding into a neighbor seat.
Ultimately I take this oped as some weird whining by a tired out of touch controversial airline executive, who possibly does not even write the piece himself!
want to fly with any type of pet? FULL FARE for the dog! NO discounts!
How many airlines did Frank Lorenzo destroy? One of the poster kids for 1980s greed.
Spare me the drivel, Frank “union busting” Lorenzo! I remember years ago in the early 80’s when you said…. if a flight attendant owns his/her home, then I’m paying them too much money. You were quoted in the L.A. Times. Go away, you haven’t been relevant for years!
Of all the people in the history of commercial aviation to get an opinion from, Frank Lorenzo ranks right up there with the worst of the worst. He had a hand in destroying airlines, not building them. He was a huckster and genuinely hated by airline employees. This is not an airline executive to be admired, or anyone that has even the slightest bit of good will in the history of the airlines.
Frank Lorenzo was one of the most destructive, toxic and truly awful representatives of big business greed in the 1980s and early 1990s. He destroyed iconic airlines, played a huge role in the destruction of labot-management relations and all for nothing. His opinion is about as valuable as any losers at a table in Vegas.
Frank Lorenzo decries current airline regulations.
In other news, Bonnie and Clyde decry tighter security measures at the nation’s banks.
Frank Lorenzo never eats or drinks items served on board airlines, as he knows how “loved” he is by airline workers.