Free up domestic air travel

The New York TimesNovember 24, 2012 

This holiday season, the major airlines signaled to some passengers to take a hike. At least that’s what travelers might infer from the smaller number of flights scheduled at many of the nation’s airports.

Between 2007 and 2012, airlines cut the number of domestic passenger flights by 14 percent, according to the Department of Transportation – with the biggest drops occurring at midsize and smaller regional airports. The five heartland hubs of Cincinnati, Cleveland, Memphis, Pittsburgh and St. Louis have lost a stunning 40 percent of their scheduled flights.

The reason is simple: Airlines have decided that the best way to earn a healthy return on their investment is to maintain tight discipline on capacity. That’s a fancy way of saying they want their planes to fly as full as sardine cans. And the way they’ve been accomplishing this is by concentrating service on the big domestic and international markets and by cutting flights in smaller, less traveled ones.

That’s smart business, of course. Why expend the same dollars on jet fuel, pilots and Sun Chips on a flight that’s likely to leave half-empty from Memphis when you can trim the number of scheduled departures from the same airport and really pack them in on each flight?

But this, of course, leaves Aunt Sally in Sarasota, Fla., with fewer options to visit family during the holidays; it leaves millions of us with longer boarding and exiting delays on our planes – and, yes, it helps drive up fare prices, too. Travelocity, an online booking site, found airline ticket prices for the pre-Thanksgiving period to be 10 percent higher on average than last year.

Unfortunately for travelers, this situation is unlikely to change anytime soon. With five airlines now serving 85 percent of the domestic market – four, if American Airlines and US Airways merge, as industry analysts expect – the major carriers are worrying less about the one factor that could disrupt their cozy, cram-’em-in strategy: competition.

That is, unless policy makers do what they should have done a long time ago and allow foreign airlines, including discount carriers like Ryanair and global players like Qantas and British Airways, to serve domestic routes in the United States. Why, after all, should an industry that has ingeniously used free-market principles to squeeze the most revenue out of each middle seat be protected from competing in a real free market?

As things stand now, the United States allows foreign airlines to serve its major cities as part of international agreements – conventions that have been around for decades. By allowing them to serve American domestic markets too, the process of creating a truly free market in airline services here would be complete and, as in the case of international markets, would provide travelers the benefit of more flight choices and lower fares.

A half-step toward opening up domestic markets would be to allow foreign carriers to serve any midsize and regional airport in the United States that has lost service in the past few years. New entrants would be able to integrate those markets with their international routes, something that could put many smaller American cities on the global business map.

Soon, Aunt Sally might enjoy the service on Singapore Airlines en route to Cincinnati. It’s a short flight from Sarasota – but the hot face towels are a dream.

The New York Times

Clifford Winston is a senior fellow in economic studies at the Brookings Institution and author of “Last Exit: Privatization and Deregulation of the U.S. Transportation System.” This is excerpted from a longer article in The New York Times.

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