Some Smaller Cities Say Airline Deregulation Left Them Outcast

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WASHINGTON -- Despite a government study touting the benefits of airline deregulation for most travelers, many medium-size communities are complaining to Congress about high fares and the lack of good service.

"Almost immediately after airline deregulation [in 1978], Chattanooga lost service from both United and Eastern Airlines," Hugh Davis, president of the Chattanooga Metropolitan Airport Authority, told a hearing by the House aviation subcommittee.

Service peaked in the 1980s, Davis said, when Delta, Northwest, US Airways, American and regionals Eastern Metro Express and Comair all ran regular service out of Chattanooga.

But the recession and other factors, including the failure of several carriers and the increasing use of hub-and-spoke systems, caused a dramatic reversal, culminating with Delta's decision to cease operations out of the city after 50 years, he said.

"To further exacerbate the already critical situation, three nearby airports had growing, low-cost airline service," Davis, which encouraged travelers to bypass Chattanooga to get cheaper fares out Atlanta, Birmingham and Nashville.

The loss of air service hurt Chattanooga's economy and its ability lure businesses from other cities, he said.

"Our business efforts have been hampered by consistently poor air service at Tri-City Regional Airport," testified Fielding Rolston, vice president of customer service and materials management for Blountville, Tenn.-based Eastman Chemical Company, a plastics, chemicals and fiber manufacturer.

"We are trying to attract new customers and suppliers to our headquarters from literally around the world. And now, more than ever, we're finding it extremely challenging. It's no problem for them to get to New York or Chicago or Miami. But getting to Northeast Tennessee can be exasperating."

Rolston said poor air spurred another Blountville company, Phillips Consumer Electronics, to relocate to Atlanta.

Other mid-sized communities complained that deregulation has hindered airline competition, resulting in higher fares.

Robert Hancik, aviation director for the Springfield, Mo., Airport Board, said his flight to Washington National cost more than $1,175, "as opposed to flying into Baltimore, Md., for $214 round trip."

"Same airline, one airport with low-cost competition, one without," Hancik said. "A roundtrip Springfield-Dallas ticket, 364 air miles, is $678, but by driving to Tulsa, a flight to Dallas is $128."

Nonetheless, a study of 112 airports conducted by the General Accounting Office (GAO) found that in the aggregate, airline deregulation has benefitted the majority of travelers because air fares have tended to be lower and the quantity of air service has increased.

"Deregulation continues to be an enormous success in bringing better service and lower fares to the vast majority of consumers at cities of all sizes," Patrick Murphy, deputy assistant secretary for aviation and international affairs for the Transportation Department, told the House hearing.

"The first year when air carriers had pricing freedom, the average real fare in the U.S. had fallen 37.2%," Murphy said.

Joint testimony by representatives from Northeastern University's Department of Economics and the Brookings Institution supported the GAO study, noting "that fares in 1993 were about 20% lower than they would have been if the industry were regulated."

But some experts disputed the GAO's findings as inherently flawed.

"By examining average fares [the GAO] produced data that is meaningless at best, and misleads consumers and this committee at worst," said Darryl Jenkins, president of the Aviation Foundation and director of the Aviation Safety Program at George Washington University.

"GAO's fare analysis did not consider the significant variance in the mix of service and customer types at individual airports," Jenkins said.

"Nor did it consider the cost impact to the airlines of short-haul vs. long-haul flights. Such variances produce substantial regional differences in the average fare per passenger mile."

No easy answers emerged from the hearing, but John Anderson, director of the GAO's division for transportation issues, resources, community and economic development, suggested that one alternative for medium-sized cities may be to take matters into their own hands.

"As of January 1997, regional jets accounted for only 90 of the 2,127 commuter aircraft in service in the United States," Anderson said. "Local communities could accelerate this trend by providing incentives for commuter carriers to serve their airports with regional jets."

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