We believe the role of the DOT is to protect consumers every bit as much as airline profits.
December 07, 2017
Air Travel Fairness, one of the largest traveler advocacy organizations in the U.S., today called on the U.S. Department of Transportation (DOT) to reject any applications from airlines for either new or expanded antitrust immunity (ATI) agreements between carriers without first instituting new protections from the harm these cartel-like schemes are causing consumers.
Airlines with antitrust immunity are able to freely cooperate with each other on fares, schedules, fleets, marketing programs and operations. Essentially, these mega-joint ventures operate as if they are a single, giant airline.
For example, once approved for antitrust immunity, two airlines that previously competed against each other for travelers’ business, perhaps offering the only nonstop flights on a given route, behave as if they are one company. The two airlines can share costs and revenues on flights, set prices including minimum fares offered on each of their flights, reduce capacity if too many low-priced seats are offered, or do away with the type of bonus and discount programs offered to frequent flyer program members when airlines are vigorously competing for travelers’ business. The airlines might call this efficiencies of scale, but consumers are the big losers.
The consumer impact is the same as when a market with two competitors changes to having only one. Two airlines, in this case, essentially merge into one, but there is no change in ownership.
“When airlines seek antitrust immunity from the U.S. government, they promise it will create more schedule options and smoother connections for travelers, but they fail to mention the high price the flying public ends up paying in…