Plane Conversations

A March 26 article in Travel Weekly by Michael Fabey brings up an interesting battle that is going on between the airlines and the FAA / DOT over the control of landing and departure slots at two of the busiest US commercial airports.

Delta and US Airways want to swap slots between La Guardia (LGA) and Reagan National (DCA) and both say the FAA/ DOT should have no say in the matter and they are prepared to take it to the courts. In an effort to avoid a legal battle the two carriers are offering to give up 12% of those slots to other carriers in the transfer.  Southwest Airlines has a different take on this since they are conspicuously left out of the deal. The article states the following about Southwest’s position:

 The plan leaves Southwest, which wants some of the very slots the FAA is trying to wrest free from Delta and US Airways, out in the cold. It opposed the modified proposal, saying it would enable Delta and US Airways to pick their competitors and make a private deal with public assets that wouldn’t be in the best interest of the public.

Southwest also viewed the slot-control question differently. The FAA must force Delta and US Airways to give up the slots to prevent the carriers from monopolizing the service in their respective markets, Southwest said.

“The DOT and FAA unquestionably have the legal authority to require divestitures of slots,” Southwest said in its filing on the issue.

 The article gives the opposing opinion of Delta and US Airways which is also supprted by American, Continental and United:

 But airlines argue the exact opposite is true. Congress has made it clear that the FAA’s interference in domestic airline matters should be limited to concerns over safety or airspace congestion, they say, and the FAA has no authority to decide on competitive issues involving things like slot sales or trades.

The carriers say the only U.S. federal agency with the authority to rule on domestic airline competitive matters is the Justice Department.

“That limitation on the FAA’s authority reflects Congress’ determination that the FAA … should not interject concerns about competition over which it has no institutional expertise,” Delta and US Airways said in a filing last week with the FAA in their bid to push through their proposed slot swaps.

Rivals American, Continental and United, meanwhile, jumped to the defense, questioning in filings the FAA’s authority to force airlines to give up the LaGuardia or Reagan slots for competitive reasons.

It looks very much like nothing more than hard ball business tactics by the major airlines to gain more control of certain markets they deem lucrative.

So the question is:  Who has the authority to regulate this? The FAA/ DOT or Department of Justice? Or should the government just leave them alone and let the market work it out?

The airlines have been struggling for the past three decades to make money in a post deregulated system. By securing competitive advantage in certain markets they can have more control over pricing which will allow them to charge air fares that will make them money. If the market of travelers doesn’t like the price they charge for air fares then the market can come up with a different solution, which may or may not include travel by air? The traveling public has an appetite for cheap air fares, but that doesnt reconcile with the fact that the airline industry must make money to stay in business.

I say let the airlines work it out and keep the government out of it. What do you say?

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