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 The Brancatelli File

joe THE BITTER LESSONS WE'VE
ALREADY LEARNED ABOUT THE AIRLINES


BY JOE BRANCATELLI

August 28, 1998 -- Regardless of whether the pilots of Northwest Airlines go on strike in the wee small hours of the morning on Saturday, we have already learned some bitter lessons about the people who run the nation's airlines.

We have learned that they are price gougers, petty thieves who think nothing of raising fares in markets where business travelers face the loss of Northwest service.

We have learned that they are amoral, liars who tout usurious walk-up fares as flexible even while making them restricted and nonrefundable for business travelers on Northwest routes.

We have learned that they are incompetent, business frauds who can't figure out how to win friends and steal market share by stepping into the chasm created by the uncertainly at Northwest.

We've also learned one other thing: airline deregulation is a failure, a 20-year pipe dream that has left us at the mercy of a cadre of cads whose only response to a national transportation emergency is a contemptuous display of their collective middle finger.

That last lesson is the one that really sticks in my craw. I've always championed airline deregulation, but even I can't ignore what has happened since Northwest and its pilots began a federally mandated 30-day cooling off period in late July.

BUSINESS FARES RISE IN NORTHWEST MARKETS
Just hours after the cooling-off period began, for example, airlines including United and Delta increased walk-up fares in markets where they compete with Northwest. The hikes ranged from $10-$50. No matter that the airlines raising the fares recently reported record profits. No matter that desperate travelers will have no option but to pay the higher fares if Northwest goes on strike. And no matter that this brand of price gouging is illegal when it is practiced by a convenience-store owner in North Carolina who raises the price of milk after a hurricane. Given the opportunity to further inconvenience and infuriate travelers struggling with a potential Northwest strike, airlines wasted no time in raking their financial fingernails across our faces.

BUSINESS FARES RESTRICTED IN NORTHWEST MARKETS
In Detroit, Northwest's largest hub, some leisure travelers pay less than $200 roundtrip to fly to Miami. Walk-up business travelers pay five times more. In Minneapolis, Northwest's hometown, vacationers headed to San Francisco pay about $215 roundtrip. Business travelers pay seven times more. Similar fare disparities exist on every route in the nation.

What do business travelers get for those enormous premiums? Flexibility, say the airlines. Leisure fares are restricted and nonrefundable, they explain. Walk-up fares are unrestricted, permit unlimited changes and are totally refundable. For more than a decade, we have heard the airlines repeat the mantra: Business travelers pay more for the convenience of unrestricted tickets.

Yet earlier this week airlines, including America West and US Airways, slapped restrictions on walk-up fares in markets where they compete with Northwest. Just like cheap leisure fares, outrageously expensive business fares are now nonrefundable and subject to a fee for changes.

Why restrict walk-up fares in Northwest markets? Airlines publicly admit they don't want business travelers to buy the fares to protect themselves if Northwest goes on strike, then ask for refunds if Northwest doesn't shut down. In other words, when faced with the possibility that business travelers might actually use the flexibility for which we supposedly pay the gargantuan premiums, the airlines respond by making the tickets nonrefundable and restricted.

What does that prove? Simply that the airlines have been lying about their fare structure for decades. Flexibility has nothing to do with the high prices we pay.

NO NEW SERVICE IN NORTHWEST MARKETS
If Northwest's pilots strike, it will ground the nation's fourth largest carrier. Northwest commands about 12 percent of the market, controls approximately 80 percent of the traffic at Detroit and Minneapolis, the nation's 9th and 13th busiest airports, and it has a de facto monopoly on air service in half a dozen Midwestern states.

If a strike crippled the fourth-largest player in any other business, its competitors would rush to serve its customers and steal its markets. In any other business, competitors would have prepared contingency plans to capitalize on the chaos. But the marketing dimwits at the nation's major carriers have done nothing to court Northwest's customers and win their business.

Except for TWA, which is adding 85 seats a day between St. Louis and Minneapolis, none of Northwest's major competitors has announced increased service anywhere Northwest flies. Even the smaller carriers have been silent, save for a handful of new flights from Spirit (Detroit-Florida), Sun Country (Minneapolis-Chicago) and Kiwi (Newark-Detroit).

Twelve percent of the nation's aviation market may be available for the taking come Saturday morning and not a single airline has positioned itself to grab a hunk. Not one competitor sees this as chance to break Northwest's grip on the Midwest. In a business where "fortress" hubs like Minneapolis and Detroit are otherwise impossible to penetrate, not one airline is prepared to step into the breach. No airline seems to understand the publicity, good will and profit that it could generate by serving travelers who will be stranded should Northwest go on strike.

This is what 20 years of airline deregulation has brought us. An industry controlled by price-gouging prevaricators who aren't even bright enough to steal market share from a wounded competitor.

I don't know about you, but I've seen enough of these idiots. It's time to admit we made a mistake 20 years ago.

This column originally appeared at biztravel.com.

Copyright 1993-2004 by Joe Brancatelli. All rights reserved.