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February 8, 2017

Barbarians at the gate

WOW Air
Apparently, being freed from consumer protection laws is not enough for the airlines.
They also seek to stop foreign competition from airlines such as Norwegian Air, WOW Airlines and Emirates.
Blocking foreign competition will result in higher prices and fewer choices for consumers.
Higher ticket prices will directly affect all who fly various US airlines, and so it’s important to make sure this issue stays in the spotlight.
CEOs from American, Delta and United will meet with President Trump Thursday, and likely will discuss placing  limits on foreign air competition, and  air traffic control privatization.
As profits soar to record levels, passengers are enduring reductions in flights, shrinking seats, and less reliable air travel, especially from small- and medium-size cities.

The major US carriers want to keep out the big Mid-East airlines: Emirates, Etihad and Qatar.
Paul Hudson, president of FlyersRights.org and member of the FAA Aviation Rulemaking Advisory Committee, compared the airline industry now to the railroad industry in the 19th century: “Then, railroads controlled long-distance transportation as well as the courts and government regulators. A new word was coined to describe their abusive treatment of the public: being ‘railroaded’. Today, Americans are being ‘airlined.'”
Furthermore, the airlines are pushing for privatization of the Air Traffic Control system. The plan for privatization leaves little room for government supervision over an inherently governmental function, would transfer all government air traffic control to an AMTRAK-like entity controlled by the airlines, and grant a long list of demands sought by the air controller union, including the right to strike. Such legislation was passed by the House in the last Congress but not acted on by the Senate.

Guessing what Trump will do is like a crapshoot

On the one hand, Trump’s view of the airline industry may be colored not by what the current state of the airline industry, but what his experience was back in the late 80s and 90s.

Trump Airlines launched in 1989 and offered hourly  flights between Boston, New York City and Washington D.C.
Trump purchased Eastern Air Lines Shuttle, which had been offering hourly flights on the East Coast since 1961 with moderate success. The airline had succeeded because of its no-frills service, you didn’t need a reservation ahead of time, there were no seat assignments, no check-ins, and no boarding passes. You could show up and hop on a plane for cheap. 
 
When Trump bought 17 of the company’s Boeing 727s for $365 million in 1988 he added maple-wood veneer, chrome seat-belt latches and gold-colored bathroom fixtures.
This alienated customers, and with the high fuel prices of the late 80s, resulted in Trump Airlines never turning a profit in its 4 years. As Time 

explains: The high debt forced Trump to default on his loans and ownership of the company was turned over to creditors. The Trump Shuttle ceased to exist in 1992 when it was merged into a new corporation, Shuttle Inc. 

He may assume its the airline industry is pretty much the same as it was back then, which it most certainly is not.

On the other hand, “no more competition” is the opposite of Trump’s economic program for some industries, such as pharmaceuticals.

Alternative Facts

Now American, Delta and United have a chance to present their version of “alternative facts” to a new administration that has already admitted through its principal spokespersons that facts be damned.

These Big 3 airlines will seek to maintain their high-fare, poor service death grip on US travelers by suppressing competition from domestic as well as foreign airlines.

In addition, they love getting all sorts of goodies from taxpayers, be it in the form of sales tax exemptions, state and municipal funding (direct and indirect in the form of payments, guarantees, or landing fee exemptions to begin service in new cities and below market interest rates from municipal bonds, respectively), plus the vast array of tools from the tax code, bankruptcy protection and more offered at the federal level.

They held out their hand to Congress and pleaded for substantial taxpayer funded bailouts in the months after the 9/11 terror attacks. So the notion that the playing field is unfair because they are facing heavily subsidized foreign competitors are, again, alternative facts.

Meanwhile, US airline profits have soared to record levels as four big airlines control 85% of ever shrinking seats, while passengers face reduction in flights, longer less reliable air travel especially from small and medium size cities.

We hope that FedEx, UPS, jetBlue, Hawaiian and Alaska Airlines and others will have an opportunity to debunk the myths presented by the CEOs of the “Big 3” legacy carriers on Thursday’s upcoming meeting at the White House.

President Trump should follow the example of Presidents Theodore Roosevelt and John Kennedy who stood up to corporate leaders engaged in abuses, not that of his immediate predecessors, who enabled the present state of US air travel: ever worsening service with fares now much higher than in the EU and most other nations.
Flyers Rights Education Fund is a 501(c)(3) charity to which contributions are tax deductible.
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