04/14/2017

Don’t Break Up The Airlines. Bring More In

James Pethokoukis, American Enterprise Institute

Viral video of a United Airlines passenger being dragged from a plane would seem to be prima facieevidence that the U.S. airline industry — and maybe corporate America more broadly — has a competition problem.

Let’s say, for instance, you’re so outraged by the incident that you vow to never fly United again. It would be a difficult promise to keep. As The Washington Post notes, United has roughly 50 percent market share in Houston and Newark, and around 30-40 percent in other major hubs like Dulles Washington, D.C., San Francisco, Denver, and Chicago O’Hare.

See, domestic U.S. flyers just don’t have a lot of options, at least not as many as they used to. Mergers over the past decade have turned the biggest nine airlines into just four even-bigger airlines: American, United, Delta, and Southwest. Those four carriers now control more than 80 percent of the U.S. market. Or to slice the numbers another way: Today, one or two airlines control a majority of the seats at 93 of the 100 largest airports, according to a 2015 Associated Press analysis. A decade ago, that number was only 78. And if you restrict the study further, you find that a singleairline controls a majority of seats in 40 of the top 100 markets vs. 34 a decade earlier.

Which seemingly leads to a simple explanation for why United didn’t make a better effort to avoid an ugly confrontation: They didn’t have to, so they didn’t bother. So bring on the extreme re-accomodation! Or as a Fusionheadline put it, “Airlines can treat you like garbage because they are an oligopoly.”

Well, if the problem is too few airlines competing for passenger business, then one obvious solution is to bust them up. Indeed, some critics — mostly on the left — were advocating a breakup even before the disturbing video surfaced. They saw, for example, last summer’s big computer malfunction at Delta as another example of airline oligopoly leading to poor service. With little competitive threat these days, there’s no need to spend big bucks on updating IT systems. As David Dayen wrote at The Fiscal Times: “We actually have a choice here, rooted in antitrust laws a century old designed to preserve competition and break up monopolies.”

But, of course, this isn’t a monopoly situation. To flip the numbers around, most large cities aren’t dominated by a single carrier. So there is some competition. (And a recent Justice Department investigation failed to find evidence of collusion among the carriers.)

Read full article



You May Also Like:

Fox News To Become More Like Despised Competitor [Watch] Art Moore, WND

GOP Border Tax Will Build A Wall Around Consumers Matthew Kandrach, RealClearPolitics

Thanks To Democrats, Pre-Existing Conditions Outweigh The Uninsured In The GOP Obamacare Deal [Watch] Avik Roy, Forbes.com

Judge Jeanine: “Time To Fight Back' Against ‘Snowflakes’ Trampling On Free Speech

France Will Now Choose Between Two Outsiders, Macron And Le Pen John Fund, National Review

No 2018 Landslide? Trump And GOP See Polls Improve, While Dems Sink Ryan Girdusky, Red Alert Politics

Ann Coulter’s Important Lesson: Appeasement Always Fails Derek Hunter, Townhall

For More go to the Home Page >>>

Search

Bookshelf

SHARE

Some titles recent, all recommended -

Special Video Feature



Voices From The 2017 International Students For Liberty Conference

In Search Of History

SHARE

Keynesian Economics and the Great Depression

Hillsdale College economics professor Gary Wolfram discusses Keynesian economics and the factors that pulled the national economy out of the Great Depression. The story of World War II shows that government spending may produce activity, but not the prosperity of a truly healthy economy.

 

-- Gary Wolfram, Hillsdale College,

Shadow Stats Snapshot


ShadowStats alternate economic indicators are based on the methodology of noted economist John Williams, specialist in government economic reporting.

  • Unemployment:
    BLS: 4.5%
    Shadow Stats: 22.5%
  • Inflation:
    March Year-to-Year: 2.74% (CPI-U*)
    Shadow Stats: 10.5%

*[cpi-u is the Bureau of Labor Statistics inflation rate for all urban consumers]