Panel contends airline industry letting consumers down

Tuesday , April 24, 2012 - 4:50 PM

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Bartholomew Sullivan

WASHINGTON -- The American airline industry is failing shareholders, employees and passengers, while regional hubs such as Memphis and Cincinnati are being starved of service and priced out of competition, a panel of experts said Tuesday.

Mergers and a focus on loyalty programs for business passengers on high-volume routes have bypassed major cities, including St. Louis, Minneapolis and Pittsburgh, forcing companies to relocate because of deteriorating air service, said Phillip Longman of the New America Foundation, a nonprofit Washington think tank that hosted the panel discussion. Longman's article in the current Washington Monthly magazine spurred discussion on whether it is time to "re-regulate" the airlines.

Longman noted that railroads were regulated in the 1880s after Wall Street financiers sought to dominate the market rather than provide services in the public interest.

James Oberstar, the former Minnesota congressman who served for decades on the House Transportation Committee, most recently as its chairman, said he introduced Essential Air Service for smaller communities as an amendment to a deregulation bill in 1978. He noted the program is now under attack.

Oberstar reviewed the history of deregulation over those 30-plus years, saying he vigorously opposed airline mergers as airlines won antitrust immunity and the public suffered "the adverse effects of collusion."

"We're now in a stall," Oberstar said, "and the future of air travel is extremely perilous. ... Government failed the public by not intervening to prevent the consolidation of economic power in the airline sector in the years after deregulation."

Tom Jones, an urban affairs specialist with Smart City Consulting in Memphis, pulled no punches when he talked about how the Delta Air Lines merger with Northwest Airlines affected Memphis.

Jones likened Memphis' situation to a frog in a pot of hot water, adjusting to worsening conditions until it succumbs. "Every person in our region has a horror story," he said, then went down a litany of examples involving businesses leaving town, residents driving to Little Rock, Ark., to catch a reasonably priced flight, and $900 flights to Austin, Texas, for a law firm required to make the flight routinely.

"There's the national music organization that relocated from Memphis because it was too expensive for its members to fly in for the annual conference," Jones said. He said Mayor AC Wharton "drove the eight-hour round trip to St. Louis for a 90-minute meeting rather than pay $976 for a 75-minute flight."

Jones recalled a breakfast meeting at which an airline official assured that Memphis was "vital to the strategy of Delta" then made "the exact same speech in Cincinnati," another regional hub now down on its luck.

Delta officials did not respond immediately to a request for comment.

Jones noted that the 25 percent cut in flights and the discontinuation of the year-round Memphis-Amsterdam flight came as the federal government was building a $72 million air traffic control tower in Memphis and the Memphis and Shelby County Airport Authority was building an even more expensive parking garage and passenger-transfer facility.

"The greatest irony of all is that, in the city where FedEx invented modern global commerce, our citizens are being priced out of participation in the global, and even the national, market," he said.

Douglas Steenland, former president and CEO of Northwest Airlines, had been scheduled to speak at the conference but did not. Instead, Joshua Marks, executive director of the American Aviation Institute, questioned whether re-regulation would serve smaller markets.

In the current market environment, Marks said, convenience brings high airfares while lower fares mean longer travel times. "The consolidation genie is out of the bottle," he said.

Marks added that other transportation, including buses connecting small to larger cities, might solve regional markets' needs.

(Bartholomew Sullivan is the Washington correspondent for The (Memphis) Commercial Appeal.)

(Distributed by Scripps Howard News Service, http://www.scrippsnews.com)

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