Competition More Fierce, but Skies More Friendly

By Passell, Peter | THE JOURNAL RECORD, February 23, 1990 | Go to article overview

Competition More Fierce, but Skies More Friendly


Passell, Peter, THE JOURNAL RECORD


``The idea,'' suggests one airline executive, ``was to throw eight pounds of paper at the guys who want to re-regulate.''

But you do not have to be a cynic to appreciate the eight-volume assessment of the domestic airline industry released last week by the Transportation Department.

For in spite of the impression left by chaotic airports, sloppy cabin service and musical-chair corporate reorganizations, there is impressive evidence that the airlines are still disciplined by competition.

The one false note in this careful research effort is the analysis of what Transportation Secretary Samuel K. Skinner's task force delicately labels airline ``marketing practices.''

The Bush administration, it appears, is not ready to challenge the mega-carriers' use of frequent-flier bonuses and computerized reservation systems to frighten away potential competitors.

Anyone who has braved the crowds at O'Hare or La Guardia knows that more people than ever are flying.

What may surprise, though, is that small towns as well as big ones are enjoying better service.

Flight frequency to 382 rural communities is up 44 percent since 1978, and a dozen medium-sized cities - like Charlotte, N.C.; Dayton, Ohio, and Memphis - have reaped spectacular tenfold or twentyfold gains.

The report notes, moreover, that the percentage of passengers with a choice of carriers grew sharply in the early 1980s and then held steady through the wave of mergers and bankruptcies.

The resulting competitive pressures have forced carriers to pass through most of the gains from higher productivity.

Adjusted for inflation, average fares are down 15 percent since 1984 and 26 percent since 1981.

One key to greater airline efficiency is the switch to hub-and-spoke route structures, which allow major carriers to provide one-stop service between thousands of pairs of cities but fewer nonstops between others.

The new route systems choke big airports with peak-hour traffic and limit the choice of carriers for residents of a few cities dominated by single carriers - notably St. Louis, Minneapolis and Pittsburgh.

But for a great majority of travelers the shift assured greater competition, even as the number of airlines fell.

In 1979, for example, the Albany-Minneapolis route was served only through Buffalo or Chicago.

By 1988 it was practical to connect through Pittsburgh and Detroit as well, increasing the number of competitors on the route from two to four.

The report acknowledges that competition is ever more dependent on airline access to major airports.

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Competition More Fierce, but Skies More Friendly
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