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 The Brancatelli File

joe TRUTH, JUSTICE AND THE AMERICAN WAY
GET LOST EN ROUTE TO THE AIRPORT


BY JOE BRANCATELLI

October 16, 1998 -- What if you woke up one morning, flipped on the tube and every other station was broadcasting the Today show? Do you think the Federal Communications Commission would be worried about the monopolistic tendencies of NBC?

And what if you got in your car that same morning, needed gasoline and six of every ten gas stations were Mobil? Do you think the Justice Department would be ranting and raving about the anti-competitive nature of the oil business?

And what if you wanted a cup of joe to clear your head that morning and two out of three coffee shops were Starbucks? Do you think the Federal Trade Commission would be filing lawsuits and formulating regulations to break Starbucks' java jive?

And what if that morning you needed to catch a flight and you went to the airport and learned United or Continental or American or TWA controlled 70 or 80 or even 90 percent of the flights from your city? Do you think the Department of Transportation would be...

Wait a minute, I forgot. Airlines do control the traffic at many major U.S. airports. And the Department of Transportation doesn't do anything. Neither does the Justice Department nor the Federal Trade Commission.

Funny how truth, justice and the American Way makes perfect sense until we get to the airport. Funny how we will fight to the death for the bedrock principals of free and fair capitalism on Main Street and Wall Street, then somehow abandon our beliefs on the interstate en route to the airport.

Bill Gates and Microsoft are eating up market share in the browser wars? Sue the übergeek and his evil empire in the name of competitive balance! Visa and MasterCard have a lock on the bank credit-card business? Haul their plastic asses into court and break up that duopoly!

Delta controls 72 percent of the traffic at Salt Lake? Northwest commands 73 percent of the market in Detroit? US Airways owns 84 percent of Charlotte?

Whaddya gonna do? You can't fight the airlines.

The lunacy of this see-no-evil, forget-our-values strategy when it comes to what the airlines' euphemistically call "fortress hubs" was slammed home this week when two separate surveys landed with a simultaneous thud on my desk. One was the American Express Business Airfare Index, the monthly treasure trove of pricing statistics. The other was a GKMG Consulting Services report for Aviation Daily on airline market share at leading airports.

To the shock of absolutely no one who's been gouged for an unrestricted ticket lately, wherever the GKMG report found one airline dominating an airport, the Amex fare survey usually found a higher-than-average business fare.

Nationwide, the Amex Index for August pegged the "typical business" fare on 215 domestic city pairs at a record-high $458. But consider what happens to that typical business fare at airports where the GKMG report shows that one carrier's market share has surged above 50 percent.

In Atlanta, for example, GKMG says Delta controlled 80 percent of the traffic during the first six months of this year. Amex said the typical business fare in Atlanta in August was $490, or 7 percent above the national average. In Cincinnati, where Delta is 77.5 percent of the market, the typical business fare in August was $474, 3.5 percent above the national average.

At Dallas/Fort Worth, American Airlines is the proverbial 800-pound gorilla with 64.6 percent of the market, according to GKMG. The typical business fare at DFW in August was $576, or a whopping 26 percent above the national average. In Miami, where American is 62.4 percent of the market, typical business fares are $542, 18.3 percent above the national norm.

In Denver, where United controls 69.3 percent of the traffic pie, Amex says typical business fares are $467, 2 percent over the national business fare. Things are much worse in San Francisco, where United controls 58.7 percent of the traffic. Typical business fares there are $541, or 18.1 percent above average.

In Minneapolis, Northwest rules the roost with 76.2 percent of the market and Amex says typical business fares are $497, 8.5 percent higher than the national average. And at Newark, where GKMG says Continental has 57 percent of the traffic, Amex pegs typical business fares at $546, 19.2 percent higher than average.

Not all "fortress hub" markets had above-average fares. TWA has 74 percent of St. Louis and US Airways controls 79 percent of Pittsburgh and business fares there are below Amex's national average.

But the overall case is undeniable: Allow an airline a monopoly in a market and they will gouge consumers, especially must-fly business travelers.

If we're offended by Bill Gates and Microsoft, why aren't we steamed at Delta? If we bring in the long arm of the law to break up Visa and MasterCard's control of the bank-card market, why aren't we calling out the trustbusters on United and American?

Why does the fundamental American belief in free and fair competition end at the airport gates?

This column originally appeared at biztravel.com.

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