Meeting Mentor Magazine

July 2017

The Trouble with Airlines:
Not Enough Competition

Following the high-profile controversy involving United Airlines physically removing a passenger from a flight in April, both the House Transportation & Infrastructure Committee and the Senate Commerce Committee held hearings in early May to discuss the state of the airline industry.

“It’s an absolute joke that there’s competition within the airline industry,” Rep. Duncan Hunter (R.-Calif.) said at the hearings. “The airline industry has become anti-competitive and consumers are being hurt in the process.”

The U.S. Travel Association expressed a similar opinion: “One major issue underlies major carriers’ recent foibles: dwindling choice in the aviation marketplace,” the association stated in a May 1 press release.

According to recent data released by the U.S. Travel Association, one of the four biggest domestic airlines (American, Delta, Southwest and United) currently controls more than 50 percent of seat capacity on flights out of 155 U.S. airports. Further, 74 of those airports are 100 percent dominated by one of those airlines.

“We all should want U.S. airlines to be healthy and profitable, but for too long they’ve dominated aviation policymaking at the expense of the traveling public, and the moment to reverse that trend has clearly arrived,” said U.S. Travel Association Executive Vice President for Public Affairs Jonathan Grella.

U.S. Travel data also found that the four biggest airlines control nearly 69 percent of domestic seat capacity. Internationally, American, Delta and United and their joint venture partners control 82 percent of seat capacity on trans-Atlantic flights. Further, nearly 68 percent of U.S. airports have lost connectivity over the last decade, according to the U.S. Travel Association data.

The data is part of the association’s upcoming aviation policy blueprint, which will use “intensive research to identify problems in the U.S. passenger aviation marketplace and recommend policy solutions to address them.” Among the association’s policy recommendations for enhancing competition:

Protect and expand U.S. Open Skies agreements, and keep government regulation out of the marketplace.

Rigorous and consistent review of antitrust immunity granted to airlines to ensure these policies are benefiting travelers and encouraging new entrants into the U.S. aviation marketplace.

Invest in airport infrastructure and restore local control of airport expansion projects by allowing airport authorities to set Passenger Facility Charge rates, which are currently capped at $4.50 and have not been changed since 2000.

Let airports partner directly with destinations and airlines to market and develop new air service routes. Federal regulations currently prohibit airports from using their own revenues to work on expanding air service through destination marketing and cash incentives to airlines.

Seat Size is a Big Issue
At the Congressional hearings earlier this month, members of Congress and consumer groups discussed anti-competitive behavior and poor customer service. Others complained about shrinking seats on flights. American Airlines recently announced it would reduce legroom from 31 inches to 30 inches — similar to budget airlines like Spirit Airlines. Uncomfortable seats are the top complaint for air travelers, with 77 percent citing it as the most hated aspect of flying. “Talk to any passenger — they feel that they are being treated as self-loading cargo,” Sen. Bill Nelson, (D.-Fla.) said at the congressional hearing.

On the plus side: Airfares are historically low, thanks in large part to low gas prices.
— Regina McGee

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