As any Economics 101 student knows, well-functioning markets include companies that compete with each other to offer the best possible product or service at the lowest possible price. The inverse of competition — monopoly — occurs when one company dominates a market and freely sets prices absent pressure to improve their product. Unsurprisingly, as competition decreases, higher prices and worse service usually result.
The American airline industry seems destined to follow an inexorable path away from competition and towards monopoly or, at best, oligopoly. Over the past ten years, what were once nine large airlines are today to just four — American, Delta, United, and Southwest. Together, the Big Four control 80 percent of domestic flights. And thanks to the consolidation of flights in “fortress” hubs like Atlanta, Chicago, Newark, and Dallas many communities lack even those choices. At a staggering ninety-three of the top one hundred airports, one or two airlines control a majority of the seats, an increase from seventy-eight airports in 1995.
Unsurprisingly, all of this consolidation has led to higher prices and worse service for the flying public. While the airlines like to tout their low fares, the reality is that those fares are increasingly irrelevant as more and more of the cost of flying is made up of so-called “ancillary revenue,” or what the rest of us experience as a panoply of add-on fees for everything from baggage to the “privilege” of sitting with a family member. And despite highly-publicized incidents (many caught on video) of passenger abuse at the hands of the airlines, the industry’s defenders continue to contend that it’s never been a better time to fly. Clearly, the occupants of the corner offices at the Big Four haven’t had to ride in coach recently.
Given this clear evidence of marketplace dysfunction, it is mystifying that Congress and many in the press continue to tout the airlines’ dubious argument that air traffic control is at the root of the problem. Their solution? A massive giveaway of our nation’s air traffic control (ATC) system to a new new non-profit board, dominated by the industry and its allies and largely unaccountable to the 2.5 million daily passengers it would be charged with protecting.
Instead of enabling this privatization power grab, Congress should recognize that the current system works well and sustain the remarkable progress of the FAA’s existing NextGen modernization program. The nonpartisan Government Accountability Office recently found that the NextGen program has produced nearly $3 billion in consumer and industry benefits since 2007, with billions of additional benefits expected in the years to come. More important, the FAA’s current system is the envy of the world on passenger safety. Since 2009, not a single certified flight operated by a U.S. airline has crashed anywhere in the world — a stellar safety record that is due in no small part to the admirable work of the FAA-run ATC system.
Given the growing benefits of NextGen and the safety benefits of the current ATC system, Congress should heed the old adage that “if it ain’t broke, don’t fix it.” It’s time for Congress to give up the charade that ATC privatization is the solution to all that ails the airline industry and put an end to this effort by industry to wrest control of a system that has kept us safe and is getting better by the day.
Vice President of Public Policy, Telecommunications, and Fraud
National Consumers League
Founder & Executive Director
In The Public Interest
Director, National Priorities