Recommends Three Highly Impactful Reforms
The Business Travel Coalition (BTC) today wrote to 34 State Attorneys General urging them to reengage, at the national level, the problem of insufficient airline industry competition. Yesterday it was reported that the U.S. Department of Justice (DOJ) and the Connecticut Attorney General’s Office have launched separate investigations into recent public communications by major U.S. airlines. According to the regulators, those communications could represent illegal coordination among industry competitors to restrict capacity in domestic U.S., transatlantic and other international markets for the purpose of maintaining and/or increasing upward pressure on ticket pricing.
However, BTC pointed out, and provided numerous examples, that this concern over tacit coordination of seat capacity represents just the tip of the iceberg and is an effect of radically reduced domestic U.S. airline competition. In the past few years the U.S. Big Three airlines – Delta Air Lines, United Airlines, American Airlines – have been in virtual lockstep in multiple strategies to reduce price transparency, undermine consumer protections and diminish competition that harms states’ citizens, blunts economic development and forecloses on the creation of travel and tourism jobs.
“While the DOJ and Connecticut investigations are welcomed and timely, the worry over coordination on seat capacity is merely one of numerous examples of patterned behavior,” stated BTC founder Kevin Mitchell. “The reality is that it is exceeding unlikely that the consolidation of the domestic U.S. commercial aviation marketplace can be undone. As such, State Attorneys General should consider, as they did in the late 1990s, evaluating structural and other reforms that would return robust competition to the marketplace,” added Mitchell.
Three available and highly impactful reforms that BTC provided substantial detail on are:
- Review antitrust immunity
- Allow cabotage
- Restore the private right of action
The BTC letter concluded, “The Big Three have been waging a war on price transparency, consumer protections and new entrant competition under the mistaken belief that now that they control the market, and have acquired greater political power, that has somehow immunized them from public scrutiny and accountability. Your citizens and communities are being harmed each and every day – and regrettably you are legally unable to intervene. However, you would find very willing partners to wage a campaign for reforms. Consumer groups, airports, travel agencies, corporate travel managers, industry associations and many more interested parties would step up and join such a campaign.