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Aviation History
1992
1992 - 0005.PDF
WMnm INTERNATIONAL Editorial Enquiries +44 (81) 661 3842 Editorial Fax +44 (81) 661 3840 Display Advertising +44 (81) 661 3315 Display Advertising Fax +44 (81) 661 8981 Classified Advertising +44 (81) 661 6373 Classified Advertising Fax +44 (81) 642 4431 Telex 892084 REEDBP G Subscriptions +44 (81) 649 7271 Back issues (recent copies only) +44 (81) 661 3315 Picture Library +44 (81) 661 3427 Flight Directories +44 (707) 46952 USA Newstrade Sales Enquiries 800 345 6478 LONDON Quadrant House, Trie Quadrant, Sutton, Surrey SM2 5AS, UK Editor Allan Winn Editor's PA Jacqueline Worsley Deputy Editor Forbes Mutch News Editor Andrew Chuter Features Editor David Learmount Military Editor Mike Gaines Air Transport Editor Ian Goold Technology Editor Simon Elliott Databases Editor Tom Hamill Editorial Assistant Kate Sarsfield Design Editor Mike Wells Sub-editor Annabel Goddard Layout Sub-editor Jenny Long Technical Artist Tim Hall Technical Artist David Hatchard Technical Artist John Marsden Spaceflight Correspondent Tim Furniss Photographer (Europe) Mark Wagner Display Advertisement Sales Sales Manager Clive Richardson Assistant Sales Manager Nick Wilcox Senior Sales Executive Janice Lowe Advertisement production Howard Mason +44 (81) 661 3882 +44 (81) 661 3882 +44 (81) 661 3852 +44 (81) 661 3843 +44 (81) 661 3845 +44 (81) 661 8809 +44 (81) 661 3834 +44 (81) 661 3838 +44 (81) 661 3096 +44 (81) 661 3842 +44 (81) 661 3828 +44 (81) 661 3848 +44 (81) 661 3847 +44 (81) 661 8047 +44 (81) 661 8047 +44 (81) 661 8054 +44 (237) 451756 Fax +44 (237) 451600 +44 (272) 358200 Fax +44 (272) 358290 +44 (81) 661 3315 +44 (81) 661 3892 +44 (81) 661 3316 +44 (81) 661 3267 EUROPE/MIDDLE EAST European Editor (Brussels) Julian Moxon +32 (2) 657 9689 Fax +32 (2) 657 5260 Munich Correspondent Douglas Barrie +49 (89) 6891041 Fax +49 (89) 689 1045 +33 (1) 4825 5261 +972 (3) 967 1155 Paris Correspondent Gilbert Sedbon Israel Correspondent Arie Egoa Sales Director (France) Pierre Mussard Representative (Italy) Romano Ferrario +33 (1) 4277 1417 +39 (2) 58084 302 AMERICAS American Editor Graham Warwick I Washington Correspondent Kieran Daly f USA West Coast Correspondent (Los Angeles) Guy Norris • f Photographer (USA) Craig Schmilman President RBP (USA) Ray Barnes Traffic Manager JoAnn Lapp Vice President US Sales John Tidy Sales. Director (Mid West and Canada) Gene Glenrjinning Fax Sales Director (East Coast) Robert Hancock Fax Business Development Director Sheena Bobbins • Fax +1 (404) 587 2927 +1 (404) 594 1534 +1 (703) 836 7443 +1 (703) 836 8344 +1 (714) 252 8971 +1 (714) 252 8972 +1 (310) 452 4464 +1 (310) 452 3515 +1 (212) 867 2080 +1 (212) 86? 2080 +1 (212) 687 6604 +1 (714) 756 1057 +1 (714) 756 2514 +1 (708) 635 9920 +1 (708) 635 0602 +1 (703) 836 7444 +1 (703) 836 7446 +1 (703) 836 7444 +1 (703) 836 7446 ASIA/PACIFIC Asian Editor (Singapore) John Bailey +65 226 3188 Fax +65 227 1769 Australian Correspondent Paul Phelan +61 (70) 532 791 Fax +61 (70) 532 791 Sales Director Mike Hancock (Singapore) Sales Executive Fiona Bartholomeusz Regional Representative (Japan) Shoichi Maruyama +65 226 3188 +65 226 3188 Fax +65 223 6960 +81 (3) 3234 2161 Fax +81 (3) 3234 1143 Publisher Les Edwards +44 (81) 661 3436 For full advertisement information see page 51. Member ol the Audit Bureau of Circulation COMMENT DEREGULATION GONE WEST C ompass Airlines was the best organi sed, best financed start-up airline to grow out of deregulation of the Aus tralian market. Unlike most of the others, it went into service and delivered on many of its backers' promises. It was run by a team which actually had experience of running airlines (albeit much smaller ones). From the start it suffered from the peculiar ^legacies of the old Australian order: air services were deregu lated, but airports and air terminals were not. At the end of December 1991, it ceased operat ing. With it died Austra lia's best chance of gaining something tangi ble from deregulation. There is a striking parallel between this ex perience in Australia and the history of dereg ulation in the USA, where the number of airlines is about the same as before deregula tion. The only difference is that a lot of passen gers have benefited from extremely low fares in the short term, and a lot of airlines have lost a lot of money. The whole episode serves as yet another warning to those who believe that European air transport will be revolutionised by deregulation in 1993. It will be disrupted, but not revolutionised. The problem is that Europe, like the USA and Australia, is a mature air transport market in which only marginal growth can still be achieved. Any new airline can grow only by taking traffic away from the existing players. Unfortunately, the existing players already have networks serving more destinations than any start-up airline can hope to do. The only way a new airline can succeed is by offering a much better standard of service or dramatically cheaper fares on a limited number of routes. While such strategems may generate traffic in the short term, neither offers a reliable way of generating profits, no matter how lean the airline is. There are basic rules of economics that no entrepreneur can circumvent; equally, there are basic operating costs for airlines that no operator can avoid. Compass is merely the latest in a long line of airlines, running back through such evocative names as People Express European air transport will not be revolutionised by deregulation, merely disrupted." and Laker, which have proved this. None of this means that deregulation as a concept is wrong — only that, so far, the mechanism of deregulation is wrong. Regulation has fostered a totally artificial air transport environment in which inefficient and unecon omic enterprises have been protected from real world economics by their ownership of key routes, and by subsidies paid by host govern ments on social grounds. The introduction of free competition is intended to break down that artifi cial environment. The removal of tight regulation, rather than boosting the number of airlines in a market, should lead to the de mise of the least efficient of the existing airlines and their replacement by stronger existing airlines or new operations. Those who would promote competition through de regulation should con sider how it might actively be encouraged, and shape the post- deregulation environment accordingly. Merely removing regulations does not promote the replacement of the inefficient by the efficient. The removal of artificial restrictions on who can operate must be accompanied by the re moval of the artificial protections which sustain the existing players. It may seem paradoxical that the only way in which deregulation can work is through the imposition of tight control: but that is what is needed. If governments truly believe in the concept of improvement through competition, then they must legislate to enable competition. That means the abolition (not immediate, but according to a fixed timetable) of unassailable "grandfather rights" and all the otlier similar paraphenalia with which air trans port is saddled, as consultants to the UK's Civil Aviation Authority have suggested already. If governments — and trans-governmental bodies like the European Commission — are not willing5:, to take drastic steps like this, they should -abandon the pretence of deregulation. Then, at least, they will save the traveller from unnecessarily raised expectations, and the air line industry from another round of Compass- style unnecessary losses. • FLIGHT INTERNATIONAL 8 - 14 January, 1992 3
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