Sunday, March 18, 2018

No Competition in Air Travel? In What Universe?


I've seen this complaint numerous times, most recently from Glenn Harlan Reynolds (hat tip -- Steve Trinward):

[I]n today’s airline world, there’s not a lot of competition. The fact is that between airline mergers and hub-and-spoke networks, most air routes are dominated by one or two airlines. It’s not like the heady competitive days of the 1980s, which is why fares are up and service is down.

Now, it just so happens that last night I booked my flights for May, to attend the Libertarian Party's platform committee meeting in Columbus, Ohio.

Let's look at the competitive environment in my area:

Fares are high to fly directly in and out of Gainesville, Florida's small airport. But there are at least five other airports within a three-hour drive: The large airports in Jacksonville, Orlando, and Tampa, as well as the smaller Orlando-Sanford and St. Petersburg-Clearwater.

When I ran an initial search for flights that covered the major airlines, I got choices ranging from $330 to $1,000+.

Then I went to see what Allegiant Air (flying out of Orland-Sanford and St. Petersburg-Clearwater) and Frontier Airlines (flying out of Jacksonville, Orlando-Sanford, and Tampa) had to offer. Allegiant had what I was looking for:

St. Petersburg, Florida, to Springfield, Missouri, total cost $125. That's ticket, taxes, baggage, the works.

Columbus, Ohio to St. Petersburg, Florida, total cost $72.50.

Add in a $100 Greyhound ticket, and I'm going still going to be able to make a side trip on the way (to visit my mother in Missouri) for at least $50 less than I would have spent flying straight to Columbus and straight back on one of the big carriers.

Reynolds's point stands, sort of: Air fares would likely be far lower absent all the regulation (with attendant regulatory capture) and other government involvement. And the nature of air travel, taking place to and from centralized locations instead of from your driveway to someone else's parking lot, makes it very vulnerable to that stuff.

But there's still plenty of competition even in that broken environment.

And not just price competition. I've always found the planes just as clean and comfortable, and the staff just as polite, on Allegiant as on the major airlines (I haven't flown Frontier, but Tamara has and she says they do well on those metrics too).

As far as price competition goes, one way the budget guys do it is by having a very low base fare and then charging extra for, well, extras. You don't get free drinks on the plane. You get one carry-on "personal item;" if you want an additional carry-on or a checked bag, you pay more (the fares I mention above include a checked bag, btw). If you want to pick your seat, it costs extra. But that kind of works both ways, doesn't it? If I fly one of the big airlines, I get -- and pay for -- all that stuff "included" whether I want it or not.

Where do the budget airlines not compete well with the big guys?

Well, they don't fly to and from as many cities. I'm very lucky because I live in Florida. Basically on Allegiant you can fly between 1) Florida or 2) Las Vegas and a bunch of other places, but not so much between those other places (it's not hard to figure out why). So I couldn't fly Allegiant from Missouri to Ohio, thus a 13-hour Greyhound ride is in my future in between the two Allegiant plane rides.

Also, most of their flights don't run every day, presumably because they want to run their planes as full as possible. Any given flight might run once, twice, or three times a week. If you want to fly budget, your trip is probably going to be at least a couple of days long, not "there today, back tomorrow."

But we face the same kinds of choices in every area: Price, features, and convenience are all things we balance when we buy pretty much anything. Store brand bread from Walmart, or name brand from a convenience store? Buy, maintain, fill up and insure a car, or summon Uber when you need to go somewhere? Different people in different situations will make different decisions based on their priorities.

By all means, let's push to de-regulate air travel as much as possible (how about completely?) ... but over-stating claims about lack of competition doesn't seem to be a very good way of convincing people.

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