Posted on: Monday, July 1, 2002

Cities fight might of big air carriers

Advertiser news services

All the following happened on June 12 and 13:

• The Philadelphia City Council introduced a bill to limit any one airline to no more than 40 percent of the gates at Philadelphia International Airport. The goal is to increase competition by low-fare carriers. If the bill passes, US Airways would not be able to operate a hub effectively.

• City officials in Aberdeen, S.D., are mad at Northwest Airlines for cutting service in half, to four daily flights, all of them to Minneapolis/St. Paul.

• Wichita, Kan., officials are overjoyed that fares on some routes have fallen by 60 percent to 70 percent since AirTran Airways started service May 8.

• In New York, American Airlines Chairman Don Carty told reporters that the complicated airfare structure most big carriers use needs an overhaul.

Is there a pattern here?

Consumers love to travel, and they fly more when airlines make it affordable. After Sept. 11, they also have come to understand that security needs to be better and will make flying cost more.

What travelers don't like is the market power that some carriers have at their hubs. That power leads to business travelers sometimes paying five to 10 times as much for a coach seat as the vacationer sitting next to them. And it turns some big airlines into bullies, using extra flights, frequent-flier program incentives and bonus payments to travel agents to try to drive small, low-fare competitors out of the hub.

Major carriers are losing billions this year. Airlines with simplified, low-fare pricing are making money, or breaking even.

Only in the past month or two have airline executives said publicly that their convoluted fare structure is broken, and that many business travelers won't come back unless it's fixed.

What's curious is why some airlines didn't see years ago that their policies were generating mistrust, even hatred, among their best customers, the business travelers who provide them with most of their profits.

An expert shares words of wisdom

Ever wonder if hotel consultants take their own advice? John A. Fox, of PKF Consulting, does.

Fox had to stay overnight in Boston and asked his office to find him a hotel room. The rate quoted to an assistant was $190 a night. He called the hotel himself and was quoted the same rate. He asked, several times, "Is that the best you can do?" The hotel found a room for $140.

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