On Tuesday morning, I found myself flying back from Los Angeles after the unexpected death of my father-in-law, a longtime public defender who had a million times more “real” courtroom experience than a former “big law” type like myself could ever have (five years, two uncontested motions). He will be missed.
And, of course, I was flying back on American Airlines.
Upon landing, my in-box was filled with requests for comments on the bankruptcy case. So here goes.
First, the case is obviously about reducing cost. Labor cost is the point that the airline led with, and the media mostly picked up on, but American also has a pretty old fleet of planes. And the fleet might be too big. Chapter 11 can help with all of this.
Arguably some of this restructuring could be done outside of bankruptcy – and American tried just that – but the advantage of Chapter 11 is speed. Every contract is opened for renegotiation, today.
More broadly, one should expect that this will be one more step down the road of commodification of domestic airline travel. Especially in the back 99 percent of the plane. Lower paid employees on fuller flights rarely makes for a good time.
With this case, every major full-service airline in the United states will have gone through Chapter 11 at least once. That means that all have the same basic low-cost structure and revamped asset package. And they all seem to be bent on offering the same service to the bulk of their customers.
Just as the nation learned in the 1970s that there really was no need for multiple railroads to offer the same basic passenger service to the same basic points across the country, I suspect we are headed for a similar day of reckoning in domestic air travel.
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