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Merge? Government should break up the airlines, instead

February 29, 2008

Even if you aren’t a know-it-all frequent business traveler or a smug aviation industry insider, you’ve probably come across the term “fortress hub.” It’s an airport dominated by a single airline that controls more than 70 percent of flights. Dallas/Fort Worth is an American Airlines fortress hub, for example. In Atlanta, it’s Delta Air Lines and in Charlotte, it’s US Airways.

Fortress hubs are important because they are what the airline industry doesn’t want you to think about as they contemplate mergers. Certainly, they aren’t what they want government regulators to ponder as they consider approving Delta Air Lines’ likely merger with Northwest Airlines, Continental’s probable marriage with United Airlines, and American Airlines’ possible acquisition of US Airways.

Fortress hubs stifle competition, raise fares, and create cesspools of customer service. They are ultimately bad for the airlines themselves because they’re incubators for a complacent workforce and company-wide morale that can at best be described as indifferent, and at worst, passenger-hostile.

And here’s the thing. These conditions already exist in cities like Detroit, Minneapolis and Newark.

They’re so awful that the government, rather than approving these proposed airline mergers, should go the other way.

That’s right. Authorities ought to break up of some of these monopolistic carriers.

They did it to AT&T in 1974. Why not now?

This is where I think critics like James Oberstar and the passenger rights coalition du jour have it wrong. It isn’t enough to stand in the way of these mergers. We need to end the monopolies that currently exist.

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

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8 comments

  • Jeff Winiarz

    When you see the term “fortress hub” and Chicago combined, one typically thinks of O’Hare, but your definition excludes ORD. No single airline has 70% of the air traffic there. United and American both hub there and there is usually enough competition between the two. Combined they have 70+% of the traffic, but not individually.(Customer Service issues are not unique to fortress hubs.)

    Now you could possibly classify Midway as a fortress hub for Southwest, but in reality SWA seems to keep the airfares in somewhat in check for ORD.

    Was the intent to say that MDW was a fortress or ORD? And if ORD, then your definition of fortress needs to expanded.

  • Christopher Elliott

    Excellent point. I modified the text to reflect that. Here are the fortress hubs that fall under the 70 percent rule:

    Charlotte/Douglas International Airport (US Airways)
    Washington Dulles International Airport (United Airlines)
    Dallas/Fort Worth International Airport (American Airlines)
    Detroit Metropolitan Wayne County Airport (Northwest Airlines)
    Hartsfield-Jackson Atlanta International Airport (Delta Air Lines)
    Minneapolis-Saint Paul International Airport (Northwest Airlines)
    Newark Liberty International Airport (Continental Airlines)

  • Chicky

    Having changed planes in both DFW and ATL, I can say DFW certainly has its act together more than ATL. Atlanta, IMO, is already a cesspool of customer service. It’s so crowded passengers can hardly walk down the concourses now. It could get worse, and I don’t intend to connect through Atlanta for any reason unless absolutely necessary.

    I’m all for the government breaking up the airlines, if it improves conditions industry-wide.

  • Joe Farrell

    I’m against the government making anybody actually do anything in this regard.

    No matter how long it takes, the mergers have shown that prices go up, and customer service, comfort and flight availability go down. Sooner or later, they get so unwieldy and so customer averse that new airlines spring up. Ala Jet Blue, Midwest Express, Air Tran even for a while. These companies have much better customer service and people actually do not complain every time they step on board.

    If the gov’t break up an airline, then they are responsible for giving them routes, planes and people they can earn a profit with. Who makes that decisin? Why, appointed politicians do. Were fares cheaper when the CAB regulates flights, fares and routes? Nope.

    Regulation increases prices = pure and simple. Let the market work over time. The fact that some much capital is required to start an airline simply slows down new entrants into the fray. Give the market time to work. If you got a new airline, with new employees [not recycled airline employees who already have crappy attitudes] and hire for attitude and train for competency, with prices slightly higher but customer friendly policies, I think it would soar in popularity.

  • susan kelly

    I’m not sure how “customer service and comfort” could go down. I’m a woman, 5’6″ 120 pounds and often my knees hit the seat back in front of me.

    And service? As a frequent traveler in my opinion its at an all time low. Lately I’ve had many customer service people and flight attendants be out and out rude to me. An example on a Delta flight last month I noticed they were serving peanuts again. My daughter (who was not with me at the time) has a life threatening allergy to them and reacts easily. So I said to the flight attendant that I was surprised they were serving them again and how do they now handle people with severe allergies? She told me, “tell her to take another means of transportation”. I said, HUH? She said tell her to drive to florida.

    Last year Delta lost my luggage 4 times in a row over 2 months and had to pay a delivery service to drive it to my home (2 hours from the airport).

    There is no other business that could operate in this manner and stay in business, they are all such a mess.

  • Tammy

    I agree. I live in the Minneapolis/St Paul area, and my problem with all the opposition to the Delta/NWA merger, is that I was kind of hoping it would go through and maybe we wouldn’t get such crappy pricing and low customer service. We certainly don’t get any discounts, I was just trying to actually use some of our 60-some thousand frequent flier miles, and we all know what a joke that is. NWA’s site clearly states that most of the time a round-trip continental US coach fare is available for 25,000 FFM. Oh, and they are even looking out for us, by breaking it down to 12,500 mile one-way fares for OUR convenience. AND their website claims no blackout dates on Northwest flights for miles. Problem is, I searched almost all dates over about a 40-day range, and they wanted 25,000 miles ONE WAY. Hmmm. So, I decided to go with their cash+miles, and buy coach ticket using miles to upgrade. I thought well, at least it’ll be first class since I have to pay for the ticket now. Funny story, each time it gave me a list of flights and miles and prices to choose from, I would pick one, and it would say “oops, there’s a problem, pick another flight” and either the flight cost or the mileage cost would go up. I felt like I was playing whack-a-mole and just couldn’t hit that dang gopher.

    My point is, like the above poster points out, I’ve just been wondering how could we possibly do worse with a merger?

  • Kevin M

    For Joe Farrell: I would agree that the government shouldn’t get involved, except that they’ve already been invovled, and deeply, with (among others) United, USAirways, Delta, and Northwest. All four have been through government-sanctioned bankruptcies that allowed them, in essence, a “get out of jail free” card. Their past customer service practices, among other things, are what got them to the state of bankruptcy in the first place, and absent “government intervention” (a generous bankruptcy law that allowed the managers of the airline to collect tens of millions while stiffing creditors and customers) those airlines, or at least some of them, would certainly have folded.

    THEN you might have seen real competition spring up to fill the gaps. But for now, the government has already been highly involved in keeping those dinosaurs afloat (even if we ignore the billions we gave them after 9/11).

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