Let foreign airlines fly in U.S.

Whenever business takes him overseas, Seung Oh prefers to fly on carriers such as Korean Air or Singapore Airlines.

“The service is much better than you find on an American airline,” says Oh, the vice president for a technology investment company in Fairfield, Conn. “Too bad they don’t fly domestic routes.”

Well, why not?

The short answer: The government won’t let them. Under current rules, the right of a foreign airline to carry passengers from one point to another within the United States is usually entirely denied or severely limited. The restrictions are meant to protect our transportation infrastructure and keep us safe.

Maybe the time has come to rethink these laws.

On Dec. 9, United Airlines made the largest bankruptcy filing in aviation history. It joined US Airways, which also is flying under Chapter 11 protection.

Overall, the airline industry will lose billions of dollars this year. United attorney James Sprayregen said his company will hemorrhage between $20 million and $22 million a day this month.

The U.S. airline industry’s massive losses are forcing carriers to cut costs deeply, which will affect workers, routes, service — and maybe even safety. United, which has already negotiated some worker concessions, says it will require even more slashing to emerge from bankruptcy.

Given these cutbacks, allowing foreign carriers into the domestic market could improve life for American travelers.

“The foreign carriers would almost certainly make the incumbents — the U.S. airlines — offer better service, lower prices and, most important, they would behave better,” said Dan Alger, an associate professor of economics and an expert on deregulation at Lawrence University in Appleton, Wis.

Is there a market for foreign carriers stateside? Absolutely. For example, Oh said he would be willing to pay extra to fly a foreign airline domestically because he wouldn’t have to endure the inconsistent service levels he finds on the American carriers.

Unlike U.S. air carriers, foreign airlines such as Lufthansa are turning a tidy profit (Lufthansa’s profits are up 172% over last year), allowing them to maintain high levels of service not offered on U.S. airlines. While its U.S. competitors cut back on amenities, meals and flight schedules, Lufthansa this summer added an acclaimed all-business-class service between Newark, N.J., and Düsseldorf, Germany.

A good analogy for allowing foreign airline companies into the U.S. market is what happened in the auto industry. In the 1970s, an influx of foreign-made autos revved up competition — and the quality of American automobiles. Similarly, the lowering of trade barriers in the natural gas market, particularly between Canada and the United States, led to lower prices and more reliable service in the mid-1990s.

Sure, there are barriers to changing these rules. But they’re not insurmountable.

The country whose carrier wanted to serve a U.S. destination would have to reciprocate, allowing our airlines to compete on its domestic routes.

Letting foreign carriers in might raise questions about security. Fortunately, the U.S. government has a new federal agency, the Transportation Security Administration, to make sure such questions are resolved.

Labor unions would put up a fight, because they view any loosening of these rules as a threat to their members’ job security. That’s shortsighted. What if JetBlue or Midwest Express — two U.S. airlines with reputations for offering excellent customer service — could fly to cities within the European Union? What if Southwest Airlines could export its low-cost structure and no-nonsense attitude to Asian markets? Certainly, the United States’ airline industry would benefit substantially from that kind of arrangement.

The U.S. government, however, insists on fighting a losing battle.

Congress last year allocated $15 billion in loans and grants to the domestic airline industry in an effort to jump-start the business. Rather than relax foreign airline restrictions, the government is rigorously enforcing them. In October, it fined Asiana Airlines, the South Korean carrier, a record $750,000 for unauthorized service between Guam and Saipan, part of a U.S. commonwealth. That’s definitely a move in the wrong direction.

If the U.S. government really wants a customer-friendly, competitive airline industry in this country, it should overhaul the protectionist laws that promote mediocrity and stifle true competition among all carriers.

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