THE deregulation of American air travel was a near-unqualified success for cost-conscious travellers, who can now fly across the country far more cheaply than in the era of heavy regulation. There are more flights and they cost less. But deregulation was never completed. Even today, foreign carriers are forbidden from competing with American airlines in the domestic market. Clifford Winston, a scholar at the centrist Brookings Institution in Washington, took on this subject in a recent New York Times op-ed. American airlines are taking advantage of reduced competition to cut capacity and raise prices, Mr Winston argues:
Unfortunately for travellers, this situation is unlikely to change anytime soon. With five airlines now serving 85% of the domestic market—four, if American Airlines and US Airways merge, as industry analysts expect—the major carriers are worrying less about the one factor that could disrupt their cosy, cram-’em-in strategy: competition.
That is, unless policy makers do what they should have done a long time ago and allow foreign airlines, including discount carriers like Ryanair and global players like Qantas and British Airways, to serve domestic routes in the United States. Why, after all, should an industry that has ingeniously used free-market principles to squeeze the most revenue out of each middle seat be protected from competing in a real free market?
As things stand now, the United States allows foreign airlines to serve its major cities as part of international agreements—conventions that have been around for decades. Foreign airlines have never posed a threat to national security or to the safety of air travellers; there’s no indication that such carriers have resisted American security measures in the past or any reason to think they’d violate any protocols required for domestic routes either.
As Mr Winston notes later in his op-ed, America’s domestic airlines are likely to oppose the opening up of the country’s market to foreign competition. Given the airlines’ pull with both parties in Congress—and the fact that airline labour unions would probably oppose this move, too—it’s unlikely that you’ll be able to take British Airways from LaGuardia to Minneapolis anytime soon. But in the meantime, Mr Winston offers a plausible half-measure that could partially open the American air travel market without drawing too much fire from the domestic airlines. Instead of letting foreign airlines in fully (a pipe dream anyway), he writes, America could limit them to mid-size and regional airports that have “lost service in the past few years”. That looks like a win-win: small and mid-size American cities get new flights, consumers get more competition, and foreign carriers get a foothold in the American market. It’s an idea worth taking seriously.
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