Keep Out!

February 8, 2017

Barbarians at the gate

WOW Air

 

Apparently, being freed from consumer protection laws is not enough for the airlines.
They also seek to stop foreign competition from
airlines such as Norwegian Air, WOW Airlines and Emirates.
Blocking foreign competition will result in higher prices and fewer choices for consumers.
Higher ticket prices will directly affect
all who fly various US airlines, and so it’s important to make sure
this issue stays in the spotlight.
CEOs from American, Delta and United will meet with President Trump Thursday, and likely will discuss placing limits on foreign air competition, and air traffic control privatization.

 

As profits soar to record levels, passengers
are enduring reductions in flights, shrinking seats, and less reliable
air travel, especially from small- and medium-size cities.

The major US carriers want to keep out the big Mid-East airlines: Emirates, Etihad and Qatar.

 

Paul Hudson, president of FlyersRights.org and
member of the FAA Aviation Rulemaking Advisory Committee, compared the
airline industry now to the railroad industry in the 19th century:
“Then, railroads controlled long-distance transportation as well as the courts and government regulators. A new word was coined to describe
their abusive treatment of the public: being ‘railroaded’. Today,
Americans are being ‘airlined.'”
Furthermore, the airlines are pushing for
privatization of the Air Traffic Control system. The plan for
privatization leaves little room for government supervision over an
inherently governmental function, would transfer all government air
traffic control to an AMTRAK-like entity controlled by the airlines, and
grant a long list of demands sought by the air controller union,
including the right to strike. Such legislation was passed by the House in the last Congress but not acted on by the Senate.

Guessing what Trump will do is like a crapshoot

On the one hand, Trump’s view of the airline industry may be colored not by what the current state of the airline industry, but what his experience was back in the late 80s and 90s.

Trump Airlines launched in 1989 and offered hourly  flights between Boston, New York City and Washington D.C.
Trump purchased Eastern Air Lines
Shuttle, which had been offering hourly flights on the East Coast since
1961 with moderate success. The airline had succeeded because of its
no-frills service, you didn’t need a reservation ahead of time, there
were no seat assignments, no check-ins, and no boarding passes. You
could show up and hop on a plane for cheap. 
 
When Trump bought 17 of the company’s
Boeing 727s for $365 million in 1988 he added maple-wood veneer, chrome
seat-belt latches and gold-colored bathroom fixtures.
This alienated customers, and with the
high fuel prices of the late 80s, resulted in Trump Airlines never
turning a profit in its 4 years. As Time 


explains: The high debt forced Trump to
default on his loans and ownership of the company was turned over to
creditors. The Trump Shuttle ceased to exist in 1992 when it was merged
into a new corporation, Shuttle Inc.


He may assume its the airline industry is pretty much the same as it was back then, which it most certainly is not.

On the other hand, “no more competition” is the opposite of Trump’s economic program for some industries, such as pharmaceuticals.

Alternative Facts

Now
American, Delta and United have a chance to present their version of
“alternative facts” to a new administration that has already admitted
through its principal spokespersons that facts be damned.

These Big 3 airlines will seek
to maintain their high-fare, poor service death grip on US travelers by
suppressing competition from domestic as well as foreign airlines.

In
addition, they love getting all sorts of goodies from taxpayers, be it
in the form of sales tax exemptions, state and municipal funding (direct
and indirect in the form of payments, guarantees, or landing fee
exemptions to begin service in new cities and below market interest
rates from municipal bonds, respectively), plus the vast array of tools
from the tax code, bankruptcy protection and more offered at the federal
level.

They held out their hand to Congress
and pleaded for substantial taxpayer funded bailouts in the months after
the 9/11 terror attacks. So the notion that the playing field is unfair
because they are facing heavily subsidized foreign competitors are,
again, alternative facts.

Meanwhile, US airline profits have soared
to record levels as four big airlines control 85% of ever shrinking
seats, while passengers face reduction in flights, longer less reliable
air travel especially from small and medium size cities.

We hope that FedEx, UPS, jetBlue, Hawaiian and Alaska Airlines and
others will have an opportunity to debunk the myths presented by the
CEOs of the “Big 3” legacy carriers on Thursday’s upcoming meeting at
the White House.

President Trump should follow the example of
Presidents Theodore Roosevelt and John Kennedy who stood up to corporate
leaders engaged in abuses, not that of his immediate predecessors, who
enabled the present state of US air travel: ever worsening service with
fares now much higher than in the EU and most other nations.
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