The (airline) Honeymoon is Over
Brace yourself, if you are an air traveler, for higher airline fares next year. Why? Because price competition between airlines in many cities and also at several hub airports will become a memory as the Reagan-approved airline mergers move the airline industry into the hands of a few giant companies.
Even Alfred Kahn, a former chairman of the Civil Aeronautics Board who boosted airline deregulation for years, is starting to eat crow. The industry, he said last week, may be “evolving into an uncomfortably tight oligopoly.” In simple English, that means a few airlines would dominate the business.
Look at some of these mergers. Northwest Airlines bought Republic Airlines and now controls about 80 percent of the gates at Minneapolis Airport. Next time a Northwest pilot says, “Thank you for choosing to fly Northwest” out of Minneapolis, you may choose to laugh.
TWA is merging with Ozark and would like to sell the combined carrier to an even larger airline, TWA boss Carl Icahn indicated recently. Reagan’s Department of Transportation, which has disregarded anti-trust principles in approving airline mergers, will rule on the TWA-Ozark merger this month. If the ruling is a green light, St. Louis airport will become a near monopoly of this merged company.
In Denver, the close-down of Frontier airlines leaves United and Continental in control of that hub. Texas Air’s pending acquisition of Eastern Airlines and several recent mergers which absorbed Northeast, North Central, Southern, and other major regional airlines in the deregulation era increased concentration in this industry. Should People’s Express fail, the principle stimulus for lower rates would be removed and a powerful signal would be given to would-be airline companies not to bother.
Earlier in this decade, the deregulators believed that anytime airline competition diminished between cities, new airlines would come into the market. This theory is now open to serious doubt. First, there are not enough gates available at many airports, and without gates there can be no new competitors. This has long been the problem at Washington’s National Airport, for example. Second, potential new airlines now realize that they will not be given any honeymoon period for their lower fares; the giant airlines will match them immediately, given their vast financial and other resources, until they are driven out of business. Then, the big airlines will raise their fares again. Thirdly, without any government anti-trust policy, the big airlines can buy up their competitors and smaller feeder airlines, as they are now doing.
In the late seventies, I spoke for deregulating the airline industry, whose prices were uniformly high and rising, if four important conditions were met. These were strong anti-monopoly law enforcement, stronger safety regulation, continuation of adequate service to smaller or more remote cities and areas, and consumer organizational rights. These conditions have received little or no attention by the Reagan regime.
Consumer rights would center on an access principle, where by law a regular notice would be printed on each airline ticket inviting travelers to join their own airline passengers’ consumer group. If, out of the millions of air travelers, only 250,000 people joined, a fully-staffed organization championing air passenger rights would change the calculus of customer treatment by the fewer, larger airlines taking control of this business.
There is increasing irritation over airline developments by some members of Congress, especially in the House of Representatives. Congressional committees have huffed and puffed periodically at this industry with little effect. Without a simple law to facilitate the organization of airline travelers through a printed invitation on each ticket, the skies are heading toward oligopoly over all and monopoly in more cities than you care to be fleeced from. It’s time for airline passengers to contact their members of Congress.
For more information on this proposal, write to Chris Witkowski, Aviation Consumer Action Project, 2000 P Street, N.W., Washington, D.C. 20036.