FAA advocates for airlines raising prices and restricting flights in New York
FAA advocates for airlines raising prices and restricting flights in New York
Following the dissolution of the partnership between American Airlines and JetBlue, which competed with Delta Air Lines, Delta sees a clear path to dominance in the Northeast. This is bad for airfares and consumer choice. Now the government has taken another step to restrict choice and increase fares.
- The FAA continues to fail to staff air traffic control
- So they tell airlines they don’t have to fly to keep their slots
- Airlines can rely on government-subsidized permission to fly to and from congested airports by not flying but preventing other airlines from flying
By reducing the number of flights and seats on the market while maintaining demand, flight prices increase. This is literally the U.S. Department of Transportation’s anti-consumer policy that benefits airlines at the expense of passengers.
The FAA is This allows airlines to keep their New York slots until October 27, 2024 without actually using them. The reason is the lack of air traffic controllers. The state air traffic control does not hire employees; lacks sufficient flexibility to pay sufficiently high wages in the New York market; Transfers take one year to process. and has largely moved away from the idea of remote work to minimize the need to have employees physically in the airport area.
- The government has subsidized established airlines and given them the exclusive right to fly from an airport.
- New entrants who want to provide services to customers cannot do so.
- And now, with the right to fly (which is granted free of charge and has a transferable ownership right – they can sell the asset!), airlines are allowed to simply use it to prevent competitors from offering services without offering services themselves.
That’s crazy.
With the FAA extending its slot waivers for New York, American Airlines – whose at least its third strategy of partnering with JetBlue was thwarted in court – is still a year away from getting its act together in the market. They don’t even have to operate their “slot squatting” flights.
Meanwhile, United Airlines has already announced the suspension of several Newark routes from the beginning of 2024 to the end of March (and there is a good chance of another suspension).
- Newark – Memphis, currently twice daily
- Newark – Sacramento, currently daily
- Newark – Kansas City, currently twice daily
Newark Airport is not FAA Level 3 compliant, meaning slots cannot be sold or leased. Instead of having ownership rights to specific takeoff and landing times, as a Level 2 airport, airlines submit and approve flight plans to the FAA, giving priority to those that have already operated flights the previous season. Slot flexibility means United can’t fly and still maintain its priority (preventing others from entering the market).
The slot system is crazy. There are several better approaches than giving airlines slots for free. For example,
- Congestion prices. Charge airlines a fee that increases with the desire to operate flights, so that the airlines willing to pay the most can fly. This means that in most cases you will get the most profitable flights that are most in demand by passengers, at most peak times. (Politically speaking, there would be a problem with losing flights to smaller cities at peak times.)
- Rent slots for 5 year periods. The airlines have to pay for the right to operate and do not get it permanently. Airlines that underutilize their slots wouldn’t keep them forever. They would go with airlines that are willing to offer the most for a short period of time rather than forever. The airport and the local government receive the added value here instead of giving it to the airline.
“Scheduling relief,” where the FAA allows existing airlines to continue flying to the exclusion of new entrants and is in the process of deciding who else can fly, is equally crazy. The granting of permanent rights, whether transferable or not, means that state airports are used to benefit entrenched interests rather than the public interest. It is time to end this system, although this seems unlikely due to airlines’ regulatory takeover.
