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About The Battalion. (College Station, Tex.) 1893-current | View Entire Issue (Oct. 10, 1983)
Monday, October 10,1983/The Battalion/Page 5 twork is done ini ium he has bt! ith for rofessors give opinions on airline problems by Michael Piwonka Battalion Reporter :ausethetecky#iree Texas A&M professors ile, he said, bee that the answer to Con- attributes his(ritental Airlines’ financial prob- g able to see. ps is to reduce labor costs, but it from the jot leir opinions differ on what s/’hesaid.'lt’itmed the problems in the first .ake the facttkifece. . our surround J 1" IMcononiics professors Dr. said he considtBen N. Wiggins and Dr. Mor- hit and run’ isjan 0. Reynolds and political ; paints where tience professor Dr. Robert A. ance to—usuai jernstein agree that Continen- ds at his studio | and other large airlines have gis moreofanivH been able to compete suc- i a vocation ton® cessfully with the smaller air lines that entered the market af ter former President Jimmy Carter signed the Airline Dereg ulation Act in 1978. Faced with increasing losses — about $65 million in the first six months of 1983 — Continen tal filed for reorganization under Chapter 11 of the federal bankruptcy laws on Sept. 24. The labor union contracts of the Houston-based carrier will be cancelled if the bankruptcy is allowed by a federal judge. Wiggins says the financial problems among major airlines are caused by reduced ticket prices resulting from the dereg ulation act and existing high labor costs. So what will be the answer for the major carriers if they are to stay in business? “In the long run, the wages (of airline employees) are going to fall some,” Wiggins says. “The standard employee is going to f et less. How much less we don’t now yet.” If Continental can reorganize under Chapter 11, it will be paying its pilots $43,000 a year instead of $89,000. Flight atten dants will be paid $22,250 in stead of $39,000. Those reduc tions in pay would save the com pany an estimated $250 million a year. Wiggins, who has studied the economic effects of government regulations, says the main reason behind the problems of the major airlines was inefficient management under regulation. Because regulation caused high ticket prices, the airlines offered more flights during the day to attract costumers, he says. The airlines ended up flying planes at 50 percent capacity, Wiggins says. To cover the fixed costs of flying, the Civil Aero nautics Board kept raising the price of tickets during the days of regulation, he says. The answer is to let competi tion decide who will stay in the market, Wiggins says. “We’re going to let the mar ketplace decide who is a viable airline company,” Wiggins says. “And if you look at the well-run airlines — Delta, United, who have been two of the historically well-run airlines — they’re doing fine.” Reynolds agrees with Wiggins that costs are too high, but feels the effects of the labor unions must be overcome if the major airlines are to remain competi tive. “You’ve got to be as efficient as your non-union competitors if you’re to survive in the long run,” Reynolds, an expert in labor economics, says. Bernstein, says the blame can not be placed in one direction. “It’s a combination of things,” Bernstein says. “The unions pushed for higher wages, but the companies were willing to give them higher wages because they could pass that cost on to the consumers as long as things were regulated. “The government was partial ly responsible because without them the whole system wouldn’t have worked that way,” Bern stein says. Bernstein agrees that reduc ing labor costs will be a necessary means to recovery. “I have trouble feeling too much sympathy for people whose salary may have to go down to $45,000 to $50,000 for 55 hours of flying a month,” he says. Fexas hosts German dignitaries ermany looks at Texas business s studio, whid under a larges is his house. Ti oines into the iful,” he said,1 a playroom, his Stacell't during theeiL United Press Internationa , of his paint»g) ALLAS _ The business re _ t eco eitedttBnjjjjp between Texas and st Germany is destined to tv, a high-ranking German tidal said after a Sunday lunch Ith 30 influential state busi- tmen and elected officials. Berndt von Staden, State Sec- iry of the Federal Office of H Federal Republic of Ger- Riy, said the mutual business Krests of Texas and his coun- pare steadily increasing and am nch :e in the lower sB icr three had - 1 What WC have 1 leas ! lwl ““ learned is that we do ly with a.MB , well when we stick on ,. L together,”Berndt von nne .22-cahber n , found at the s Staden said. We do he weapon w not (J 0 we H when do weapon had:T we don’t. nK said the men; neet withall|Med “we heavily depend on erson at the raour development” for econo- tt live miles m nic stability in Germany, man, to discusiT“We wish you well not only tralight plane, |^ use we’re your friends, but pause it’s of such great interest to us),” von Staden said at a said officialswr^ws conference, i white 1981 SiilBr on staden is accompanying ind at thesce: y es( G errnan president Karl no suspects. Ht« stens on bj s 12-day tour of >evidenceot,: |i| countr y t o commemorate men had noi«By ears 0 f Q erman immigra- a R8 ec * pn to America. Carstens stop- td in El Paso and Dallas after •iffsaid robberjBting President Reagan in m ruled outasilashington, D.C. le of the victiniiB t $100 in his i ers had fromilij Carstens, von Staden, and other members of the German delegation met with Texas pow er brokers, including Governor Mark White; Ray Hunt, chair man of Hunt Oil Co.; Admiral Bobby Inman, former deputy director of the CIA and now head of the Austin-based MCC Corp.; and Ed Cox, chairman of Southern Methodist University. Von Staden declined to pro vide details about specific busi ness opportunities discussed at the private lunch. He did say Dallas was chosen as a stop for the German delegation’s visit in part because the Dallas-Fort Worth International Airport is a “major stronghold” for Lufth ansa German Airlines. Von Staden also said the 9 percent economic growth rate in Dallas is envied by Germany which has only about a 3 percent growth rate. “What we have learned is that we do well when we stick together,” von Staden said. “We do not do well when we don’t.” He emphasized that Ger many’s battle with recession will be won only if the United States first overcomes its economic problems. Von Staden, who served as German ambassador to the U.S. for six years, also repeated the pro-military theme and belief in a strong NATO alliance that President Carstens has urged in speeches throughout the U.S. this week. While appearing at Fort Bliss Saturday, Carstens called for said the men's,,, Itralight planesl nown link beftl 'ife and son i es’ body nearj aut 8:30 p,m,S ingtoth tte. Deputies It other three! er the carpel, said the doot 1 (he lights wettl ■re were welleni] mderneath tltj leers who Mi bout eight t em. 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Von Staden said that the ma jority of West Germans favor missile deployment and that less than 20 percent of the popula tion is involved in the opposition peace movement. “Neither you nor I love mis siles,” von Staden said. “That is not the point.” Instead, he said, it is important for NATO to be firm and maintain a strong negotiating position. CO-OP STUDENT ASSOCIATION MEETING: Tuesday, Oct. 11 510 Rudder, 7 p.m. Speaker: Terrance D. Dill M.S. Tax Coord. “TAX LOOPHOLES FOR STUDENTS” YOUR FREE GIFT FROM ESTEE LAUDER: Personal Polishers A 17.00 Value Yours with any Estee Lauder purchase of 7.50 or more A wonderful collection of richness just for you: • Swiss Performing Extract • RE-NUTRIV Lipstick • Cinnabar Perfumed Body Creme • Beauty Mirror ( \ T > | ^ , 4 ■" 'i i ’i ' " ■ /'■/' ! v 7;,. pA^GXa, One to a customer. Offer good while supply lasts. Quantities limited. ESTEE LAUDER NEW YORKHONDON*PAR!$ All products made in U.S.A. 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