KEEPING AIRFARES GROUNDED WITHOUT A LOT OF RED TAPE
Regarding "Prying open the open skies" (News: Analysis & Commentary, Feb. 9): More regulation? Please, no! Regulation was the hallmark of the years up to the 1980s, and since this burden was lifted, everything from telephones to trucking is more reliable, with more choices at lower cost. We need less regulation and more enforcement of existing antimonopoly laws to give competition a chance.
Try this: Any airline that holds more than 66% of the traffic on a route should be able to change prices and fare categories only once a year on that route. Simple enough. What it means is that Delta, for example, would be locked into its pricing for all fare groups for a full year on the Tampa-Atlanta route, forcing it to either hold a reasonable price or allow a competitor a year to operate without fear of predatory pricing.
Omnia Group Inc.
TampaReturn to top
THOSE FALLING OIL PRICES HAVEN'T HIT BOTTOM YET
Readers of "How low can oil prices go?" (News: Analysis & Commentary, Feb. 2) should also note two additional developments that will contribute to low petroleum prices. First, the impact of the Asian economic crises will increase supplies of petroleum products as well as reduce demand. Indonesia and Malaysia, both oil and gas producers hard hit by currency woes, are expanding production to generate crucial export earnings. Thailand is pushing forward on offshore development projects for the same reason.
Second, Iraqi oil sales may very well increase significantly, subject, of course, to the outbreak of hostilities. The U.N. has now proposed more than doubling Iraqi oil sales under the Food for Oil Program to $5.2 billion every six months. Iraq is entitled to sell oil under the program up to a fixed U.S. dollar amount, whether the existing $2 billion ceiling or any higher ceiling the U.N. Security Council may adopt. If per-barrel prices continue to drop, then Iraq is entitled to increase production to restore its sales revenue to the maximum amount permitted.
Milbank, Tweed, Hadley & McCloy
WashingtonReturn to top
GIVE FASB CREDIT FOR WARNING ABOUT STOCK OPTIONS
There is striking irony in Jennifer Reingold's article, "Accounting changes that keep investors in the dark" (News: Analysis & Commentary, Feb. 9). For years, the Federal Accounting Standards Board (FASB) tried to do the right thing on stock options in the face of pressure from corporations, the business press, and accounting firms. Ultimately, facing a threat from Congress, FASB reluctantly issued its current ruling, while noting that it still believed it flawed in not recognizing compensation in the form of stock options. It is interesting that it is now held to blame for the resulting bad accounting.
Kenan-Flagler Business School
University of North Carolina
Chapel Hill, N.C.Return to top
AUTONATION NEEDS TO SHIFT GEARS AGAIN
AutoNation USA is rapidly becoming that which it sought to overcome ("Republic learns cars ain't videos," The Corporation, Feb. 9). The sales staff, which was originally salaried, now works on commission (translation: higher pressure). Moreover, consumers are benchmarking the fixed prices at AutoNation and then using that as a basis for negotiation at competitors' locations. Thus, competitors are the true benefactors of AutoNation's presence and have generated more sales in markets where AutoNation has entered.
AutoNation only addressed the supply side of the equation. Now it must address the demand side to become a long-term player in the used-car arena.
Stuart H. Angert
Remarketing Services of America Inc.
Amherst, New YorkReturn to top