Travel Groups Urge Congress to Investigate Airline Competition
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A group of travel organizations, which includes the U.S. Travel Association and the American Society of Travel Agents, is lobbying Congress in the hopes that it will take a closer look at airline competition. The government did establish a commission to investigate airlines back in 1993, but a lot has changed in the industry since then.
Is a closer look needed after mergers?
The recent spate of mergers has left relatively few major airlines in control of the industry. Along with Southwest, the remaining three legacy carriers have about 80 percent of the market share for flights within the U.S. Ultra-budget airlines like Spirit, Frontier and Allegiant have provided some competitive fares on select routes, but their presence is not (yet?) big enough to really affect the whole marketplace.
“Clearly, the air travel industry has seen major changes in the past few decades, and so we think that it is entirely appropriate for Congress to take a hard look at these changes and the impact they’ve had on competition, customer service and other issues," said ASTA Senior Vice President of Government and Industry Affairs Eben Peck. "As the national trade association for a critical part of the aviation industry, ASTA fully supports the proposal to create a new airline competition commission and looks forward to working with our allies and other stakeholders to see it through to enactment.”
Lack of domestic competition is not the only issue that traveler and travel agent advocates want the government to look at. U.S. carriers are also forming alliances with international airlines that go beyond basic code-sharing agreements. For example, American Airlines and LATAM have inked a deal and are waiting for regulatory approval that would allow them to set prices and schedules on routes between the North and South Americas and easily use each other’s networks to offer connecting flights to their customers.
Thus far, the goal of the travel advocacy lobby is to get Congress to look into the current level of competition for the simple reason that so much has happened since the last commission studied the subject in 1993. They are not asking for any sort of regulation at this time.
1993 report was against more regulations
What did that 1993 commission find? Officially started by the Clinton administration, the National Commission to Ensure a Strong Competitive Airline Industry found that any sort of re-regulation was not in the best interest of airlines or fliers. The group of experts decided that the best policy was to focus on enabling economic competition, especially on overseas routes where U.S. carriers were competing against government-supported international airlines.
The commission’s report even went as far as saying that the FAA should consider doing away with some of the rules that were still in place after deregulation because these rules served to increase operation costs for airlines.
What do airlines think?
The airline trade association Airlines for America stated that a new commission would be redundant because airlines have already been under the government's microscope in recent years. The Department of Justice had to look at issues like competition before approving each of the last four major mergers: “In approving the last four airline mergers, the DOJ has found consumers benefit from strong networks, improved efficiencies and new and increased service.”
A4A went on to say that, considering the services airlines provided, the cost of flying remains quite low. “The financial viability of U.S. airlines is critical to their ability to provide service to consumers, whether connecting small communities to larger cities, or the U.S. to the world. Commercial air service remains one of the best consumer bargains as airfares have not kept pace with inflation over time, and recent mergers have not changed that as today’s fare levels still remain below fare levels in 2000 on an inflation adjusted basis.”
Not the first call to for change
This is not the first time that someone has voiced concerns about the recent mergers stifling competition. The Government Accountability Office published a report that looked at airline profits and competition between 2007 and 2012. One of their main findings was that larger airlines were pulling out of smaller markets so that fliers in these cities and towns had fewer choices. However, the GAO report also stated that the changes were ongoing (the American-U.S. Airways merger hadn’t happened yet), so it was difficult to make any sort of recommendation at the time of publication.
Now that the era of mergers has passed, the call to investigate competition (or lack thereof) among airlines is resuming. Another reason that the lobby is pushing for action right now is that March 31 is the deadline for a vote on new FAA’s policy legislation. Travel advocates will seek to tuck a new version of the 1993 commission into the legislation, thereby guaranteeing that a study could take place very quickly.
There will be a debate about whether or not Congress thinks that a new commission is needed, but it probably will not be a long, drawn out process because of the March 31 deadline.
TravelPulse's Robin Amster contributed to this report.
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