U.S. airlines urge government to resist intervention

WASHINGTON Thu Nov 12, 2009 7:21pm EST

WASHINGTON (Reuters) - The Obama administration should resist any calls to re-regulate or otherwise intervene in airline operations in an attempt to ensure the industry's viability, major U.S. carriers said on Thursday.

The comments came as Transportation Secretary Ray LaHood chaired a conference sought by labor unions on the competitiveness of an industry that continues to struggle financially after restructuring earlier this decade.

LaHood said the agency would establish an advisory committee to study the matter and formulate recommendations.

"We're going to look at these issues and figure them out. We're going to have a plan for the future of aviation," LaHood told reporters after the conference, which was closed to the media.

Airlines have struggled this year with weak revenues due to soft demand and expect billions in losses as a group for 2009.

Consumer complaints about cost cutting, deteriorating service, flight delays and a series of high profile maintenance lapses have prompted scrutiny from policymakers and Congress.

Some members have questioned whether the airline business model is broken and unions, which have lost tens of thousands of jobs since 2001, are pressing for change.

LaHood requested input from airline executives, labor and analysts about topics the transportation panel should review. The conference covered financial, safety, labor and operational issues, participants said afterward.

Major airlines are nervous about congressional or administration intervention in their operations and say their weak financial state should not be a pretext for federal action.

"Our request is to simply let us run our businesses," US Airways Group Inc LCC.N Chief Executive Officer Doug Parker said in a letter to LaHood.

Parker's sentiment was mirrored by other airline officials, who said a return to regulation of airlines was a bad idea.

"For those who think re-regulation is the answer, think again -- because our financial situation was no better then," said Peter McDonald, chief administrative officer at United Airlines, a unit of UAL Corp UAUA.O.

Unions, which have the ear of the current administration after years of contentious relations with the Bush administration, suggested government should consider raising the bar for entry.

During three decades of deregulation, many low cost carriers launched service only to fail during a downturn. These low fare airlines have put enormous pressure on larger carriers, which are heavily unionized.

LaHood reacted coolly to the idea.

"I have never heard one word spoken by the administration about re-regulation," he said.

Airline chief executives were invited to the conference, but major carriers sent other officials.

(Reporting by John Crawley; editing by Matthew Lewis and Andre Grenon)

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