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Q. Icahn insists that he can compete only by operating as a discount carrier.
A. He's wrong. TWA's financial results would have improved if he had simply matched our fares. People choose how to travel based on price and frequency. Now our business is the closest thing we have in this country to a perfect marketplace. The prices are always equal because there's nowhere to hide. You make one telephone call to your travel agent, and all of our prices come up on the computer. Anybody who offers a higher price for the same thing loses your business, so we all keep matching the competition. And when the prices are the same, people pick an airline according to the quality of its service. It is foolish to call yourself a discounter and throw away good service. Because the way this business works, the guy who offers superior service at the same price always comes out ahead.
Q. But Icahn cannot compete with you on equal footing. He is in Chapter 11. He doesn't have your level of service, your new planes or the money to buy them.
A. Whose fault is that? You can't invest capital in things like new planes if you don't earn money. It isn't my responsibility to worry about the financial inadequacy of my competitors. I have to worry about American Airlines and what's good for our customers. TWA is bankrupt as a consequence of their past actions. They chose to pull out of their Chicago hub, which was a bad decision. They chose to sell off routes. They chose not to invest in new planes. They chose to allow the quality of their service to deteriorate. I didn't. TWA is dead last in quality of service among the major carriers. And it is those things that have created their current financial situation. American made different choices, and is stronger as a result.
Q. Are you saying there is only room for one kind of pricing -- your pricing -- in the airline business?
A. No. Take Southwest. Their fares are extremely low. They have been the most successful airline in the industry for the past 20 years. But they are offering an entirely different product. There is no reserved seating. They have no galleys on their airplanes. They cannot transfer your bags to another airline.
Q. What about other no-frills airlines?
< A. The term no-frills is wrong. I mean, what is a frill? The ability to buy a ticket to Berlin is not a frill. Getting food on a transcontinental flight is not a frill. Getting your bags transferred to your connecting flight is not a frill. Our customers want these things. And when we slip up on any of these things, we hear about it.
Q. Given the tough economics of this industry, how many major carriers can survive?
A. I think there is room for more than three, fewer than six. There are seven now. American, United, Delta, TWA, Continental, USAir and Northwest.
Q. So you believe that two or three more major airlines will drop out?
A. I don't think they're going to drop out. Somehow or another they're going to be combined with a national route system.
Q. You insist that your new fares are good for everyone.