Recently I’ve been reading a lot of articles & seeing a lot of media attention over the fight between Delta & the ME3 – composed of Emirates, QATAR & Etihad. And Delta is definitely coming out swinging with allusions of unfair playing fields, government subsidies & many other claims against these carriers. And other carriers are claiming the same thing as well, but in reality we’re doing similar things with our airports & services here in the USA.
And I’ve got a totally different view on it: Let them compete here in the USA. Welcome them with open arms, let these carriers (And for that matter anybody who wishes to come into the USA) fly within our borders, purchase our airlines & wake the Big Three up.
Now, I can hear the grumbling now. “How anti-American can you get! That’s unpatriotic!” Go ahead – curse my name, call me nasty things. But let’s take a deeper look into why this would be a good thing, and how it could finally awaken our airlines to do their job better, and to make the experience more passenger friendly.
Back to the Beginning
To start, we need to go back in time to the early era of Deregulation. From 1978-1990, 86 airlines achieved the start of pure-jet service in the USA, bringing forth a new wave of competition which shook the majors into losing their sense of complacency. Carriers like PEOPLExpress, America West, Midwest Express, Midway & Southwest took the country by storm, and each represented a different take on how airlines should operate within their niches. And the majors were totally unprepared for this, many of which went through transformations to learn how to compete again. Formerly stodgy & unresponsive network airlines had to re-think how they presented service, many of which rose through their own merits to give the customers a good product at a reasonable price. No longer protected under the C.A.B.s hand, they had to improve or die – which of course, some did improve, and some did die.
The ability for upstart airlines in the USA to appear in the modern era has been stifled by the Big Three. The cost of entry is so high that it is prohibitive, with a new carrier needing upwards of $500,000,000 million to even get a plane in the air, and to survive the first few years without going bankrupt. And even then, the course is rocky – not every carrier will be able to survive the competition from the network carriers, or even the ULCCs. Basically, our airline industry has become stagnant – with little innovation from the Big Three.
So here come the ME3, the Europeans & others. Some have figured out back-door ways into the US market. Norwegian, whose use of international route access points means they can operate into certain Caribbean markets & mainland Europe with bases in the USA. Other carriers such as Lufthansa have bought into other carriers as far as they can under the US law of 24.9% ownership. And the ME3 are asking to fly domestic segments within the USA.
And the protests begin – by the Big Three. They don’t want the competition. They say they will undercut fares & fly using unfair subsidies. They don’t want other kids playing in their sandbox.
Let Them In
Let’s open the door to foreign airlines in the USA. Let them come and start service in the USA. Allow them to run flights across our country, with better service, better fares & better competition. Give them a chance to show what a better product does to a passenger’s choice of carriers.
Our airlines here in the USA have become stagnant again. Service is non-existent domestically, unless you’re willing to fork out a healthy hunk of cash for domestic business or first, and even then, the product doesn’t match the price. While we have welfare airfares in coach, the add-ons of luggage, seat assignments & other items often pushes the fares up, sometimes to rather astounding levels. On a recent trip to Knoxville, the discounted airfare was over 500.00 round trip – NOT including the 50.00 in luggage fees, the food I had to buy prior to travel or any of the other things I required for the 7 hours by air to/from there. So while we have (in theory) lower prices in some markets, the service doesn’t match the prices overall.
Now let’s look at what an equivalent journey on Emirates has in economy: On a short 1 hour flight, cold sandwiches, candy & beverages are served. On a three hour flight, a full hot meal service is served, including appetizer, salad, meal & dessert, plus beverage services. And on a longer 6 hour journey, a full meal service, and a second hot snack service follows. And it isn’t just the ME3 doing this – it is almost all major airlines in the world offer this level of service. Price wise over the same distances – the fares match our domestic carriers, and in some cases are less.
While I don’t think we need meals on an hour flight, or even more complex services on mid-length trips, there are some serious holes in how our US carriers are operating and treating the passengers. And there is no reason for the Big Three to change, as there is no real competition from anybody providing a better network product at a price people are willing to pay. And the Big Three know this, and smile quietly to themselves about how they now hold 66% of the US domestic market to themselves. Count in Southwest Airlines, and this surges to 84% of the domestic capacity is held by four carriers. The remaining percentage, held by the ULCCs & Niche carriers, provides very little in the way of challenging the major airlines.
Back in 1984, Alfred E. Kahn, father of deregulation, was quoted as saying “There will never be a time when we will have less than 12-13 major domestic carriers in the USA.” This should be engraved on his tombstone as a reminder. And without new competition, our airline industry will remain in stasis, with no impetus to change or even invest in the passenger & product part of flying. Let the ME3 – and others – in. And let the Big Three know that they can be challenged to improve to compete.
Other “Must Read” posts by RD Sussmann:
- Shuttle Diplomacy: The Rise of American Aviation’s Backbone
- United Untied – What Happened to this Once Great Airline?
- Low Cost Carriers: The rise, fall, rise, fall, and rise again of the basic airline.
- Editorial: Delta Airlines – The Sleeping Giant Awakens
- Editorial: The New American Airlines