Final approach to monopoly of the skies

[Hannah Bell]

When Congress deregulated airlines in 1978, the central premise was to expand competition, offer consumers more choices and lower prices. On all accounts, these have been exposed as complete myths and distortions. Today, 30 years after the deregulation of airlines, there is a virtual monopoly in the skies and steadily increasing fares.

There are now only five major U.S. carriers on the world scene, with many savvy analysts predicting only three surviving, along with a scattering of several domestic low-cost carriers like Southwest. It is much the same internationally...

Champions of the free market boast about upwards of a 20 percent reduction in fares since 1978... But this is very misleading. There are several factors contributing to the decline in prices. For example, booking online has almost entirely eliminated the large commissions of travel agents...

And while it is true that fares to large cities has benefited from increased competition, where it exists, smaller communities have, conversely, seen substantial fare increases... Millions of travelers are also forced to purchase tickets to major hub airports they otherwise would have bypassed during the period of regulation...In addition, assorted service fees are among hidden costs which do not appear on the announced ticket prices...

UNDER REGULATION, the government exercised control over fares and routes, established labor standards and limited market entry of new airlines. The idea was to ensure service to a wide variety of markets, to establish uniform working conditions and to maintain reasonable pricing. Carriers were guaranteed a profit through a cost-plus income formula.

In an attempt to expand airlines more efficiently, competing airlines were spread out, thus reducing competition in any one large market while ensuring service to many smaller airports. Anti-trust immunity was granted to airlines who were assigned a market in exchange for maintaining government regulations such as fare structure and labor standards...

EVEN BEFORE recent mergers reduced major U.S. airlines to five (apparently soon to be four), carriers were aggressively looking for ways to get a competitive edge by use of code shares and alliances stretching across the continents.
Today, there are three major world alliances, Star (UAL), Skyteam (Delta) and OneWorld (American) which share routes, equipment and facilities. This efficiency would ordinarily be laudable but in an unregulated market, these partnerships also dramatically reduce competition, enabling airlines throughout the world to jointly maintain higher fares...

http://socialistworker.org/2010/05/06/final-approach-to-monopoly-skies