Passengers need DOT/FAA protection — not anti-consumer regulations
The Department of Transportation and the FAA have made rules over the years that were designed to help the struggling airline industry. Keeping the industry operating was a part of keeping our economy healthy. However, today, with dramatic consolidation in the industry, what were once measures to help the industry have turned into anti-consumer regulations and anti-free-market weapons.
DOT/FAA rules, rather than watching out for the interests of the American public, more and more, are protecting airlines and their oligopolistic control of the international system. It is time that Congress, the DOT and the FAA re-examine the impact on competition from their grants of antitrust immunity, imposition of slot controls, and their approval of code-sharing arrangements.
DOT and FAA rules are now abetting the giants of the consolidated airline industry.
The following kinds of activities can only happen when airlines are no longer truly competing with each other through DOT anti-consumer regulations like antitrust immunity actions and other DOT/FAA actions.
• The Big 3 Airlines — America, Delta and United — are battling to stop the expansion of the Gulf Carriers in the US.
This is all because of their joint ventures and airline alliances that serve the Middle East, southern Asia and southern Africa. The US carriers have less than a handful of overlapping competing routes. This is a struggle to maintain control of the international markets for their alliances in the fastest growing regions of the world.
• Consolidation has given larger airlines more control over important airports.
When large airlines, made stronger through consolidation and antitrust immunity (ATI), gain control of large airports, prying take-off and landing slots and gates from their corporate fingers becomes more difficult. Slot controls and gate hoarding prevent new entrants from being able to fly and compete from large airports. For example: Virgin America (now part of Alaska Airlines) waited more than three years for gates at Chicago O’Hare Airport in order to start service.
Today, Delta controls the majority of slots at LaGuardia. Through these slots (for which they paid nothing, for the most part) they can stop expansion of competitors. Internationally, Delta’s code-sharing arrangement with Aeromexico (a SkyTeam partner) is making expansion of competitors who want to fly from Mexico City to the USA very difficult. The rules for airlines are anti-consumer regulations.
Ever wonder how airlines used to move passengers from one carrier to another when there were weather or mechanical problems? They have agreements made among the airlines to handle stranded passengers. Airlines would help each other and, hence, passengers, by taking care of passengers during disruptions.
The Big 3 — America, Delta and United — once had a tight contractual arrangement to help fellow carriers and passengers in case of “irregular operations.” However, in order to strengthen their alliances, some of the interline agreements have been eliminated. This means less use of other airlines during weather events and restricted baggage transfers. USAirways, which once had interline arrangements with Frontier Airlines, Spirit Airlines and others, canceled their contracts when the merger with American Airlines was approved. This kind of contractual collusion is another way that the large consolidated airlines can cement their economic power and damage passenger service.
• Restrictions on distribution of airfares.
In the past, advertising availability of flights was part of the lifeblood of the airline industry. Today, with consolidation and the dawn of capacity controls, airlines no longer need to truly compete with each other. Since there are so few flights compared to demand and since many airports only have a limited choice of air carriers, major airlines are not so concerned with getting their schedules and airfares out to the public.
Delta is the poster child for this anticompetitive behavior. They have restricted the publication of their airfares on search engines run by Hipmunk, Skyscanner, Travelzoo, TripAdvisor and more. When consumers cannot see the airfares it is impossible to comparison shop. That is Delta’s aim — stop comparison shopping and throw a wrench into the free market. [Note: Delta does not publish any frequent flier requirements for flights; passengers must query the airlines to see what the frequent flier cost is at the moment of booking.] Here, the problem is no consumer-protection regulations, not anti-consumer regulations.
Are ATI, code-sharing and slot hoarding, together with DOT decisions, harming competition and everyday airline passengers? Yes.
• The approval of Norwegian Air International’s petition to expand service across the Atlantic that was bottled up because of protests by the Big 3, which do not want any low-fare competition in their international playground, finally went through. Now, transatlantic airfares have come into the $500-$600 range, once unbelievable.
• Gulf carriers are not being hurt today, but may be in the future. The Big 3 are trying to roll back negotiated treaties to help their alliance partners and make access to the fastest-growing world markets more difficult for American corporations and residents.
• New service between the USA and Mexico is being stymied by Delta’s new ATI arrangement with Aeromexico.
• Stranded passengers are watching wistfully as planes with empty seats take off to their destinations during mechanical and weather delays because the airlines refuse to work together for the stranded passengers’ benefit.
Code-sharing and international airline alliances are no longer working for consumers.
Once upon a time, when the airlines were struggling and there were more than a dozen airlines, these actions seemed somewhat reasonable, though they were controversial even back in those days.
Today, the consolidation of economic power in the hands of the Big 3 is dangerous for the aviation free market. It is slowing the growth of competition both domestically and internationally. It is time that the government investigators re-examine the premises of these kinds of arrangements — code-sharing, airline alliance and antitrust immunity grants.
The American public needs a shot of competition re-injected into the aviation market.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 11 years with Congress, the Department of Transportation and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
