Flying stinks because there’s not enough competition
DECADES ago travelling by air in America was a glamorous affair. Today it signals delays, discomfort, extra charges and the threat of violence. Air fares are higher per seat mile in America than in Europe. When costs fall, consumers in America fail to enjoy the benefits. Airlines in North America posted a profit of $22.40 per passenger last year; in Europe the figure was $7.84. Standards of service are also worse. Only one operator based in America can be found in the world’s 30 best carriers, as rated by Skytrax, an aviation website, compared with nine from Europe.
This happy combination of low fares and reasonable service has a simple explanation: competition. American policymakers have presided over a wave of mergers in the past few years, while in Europe, where the top four carriers have around 45% of the market, policymakers have got three things right.
First, European regulators have tried harder to preserve competition between existing carriers.
Second, Europe has made it easier for foreigners to boost competition by entering new markets.
Third, Europe has also encouraged competition between different airports and their main operators. Breaking up the ownership of London’s biggest three airports has saved passengers £420m ($628m) in fares since 2009, according to ICF International, a consultancy.
America, it’s time for a change.
Originally published at Dwayne Nesmith.