VIII. SFO - Airline Deregulation
Deregulation of the Airline industry has left airports with a limited ability to influence airline decisions. If an airline insists on flying smaller aircraft that seats fewer people, the airport cannot mandate a change even if that small plane is competing with larger jets for space in the pattern during the busiest part of the day.
There is a limit to the number of planes that can fly into or out of any given airport. The right for an airline to arrive or depart has a value that increases as demand increases. If airports had the ability to adjust landing fees to reflect demand, then airlines might shift to larger planes during the peak periods and bring their smaller planes in when the airport was less congested.
Another approach, known as slot controls, would allow airports to place limits on the number of scheduled flights so that airlines do not schedule more flights than an airport can accommodate. Slot controls have been allowed at La Guardia Airport in the past. When slot controls were recently removed at La Gaurdia, La Guardia became the hands down leader in airport delays. La Guardia and the FAA are now addressing delays by reinstituting controls. Congress is considering regulatory changes that might rationalize the use of runways at La Guardia. These changes should apply to all major airports.
Richard Golaszewski, a consultant to the FAA, concluded, "The problem is that the resources are not priced properly. In fact, they are not priced at all. That means that airlines have no incentive to limit their use of air traffic control services even at the most crowded airports. We have taken off all of the controls on what airlines can do, but we haven't done anything to balance demand and capacity."
A recent Department of Transportation report concluded that larger airlines, "at times have responded to new competition with fare cuts, capacity increases, and other practices that are designed to reduce competition."19 The report found that larger airlines have used overscheduling as a tool to force competitors out. Once competitors have been driven out, fares increase. Fares from hub airports dominated by a single carrier are typically higher than those from non-hub airports. Reducing delays by flying fewer larger planes makes common sense but cutthroat competition continues to produce more planes than any number of runways can serve.
Smaller airlines are less able to tolerate delays because they tend to operate regional flights that suffer the majority of delays. Larger carriers operate a significant number of transcontinental and international flights that are less likely to be delayed or cancelled.
Recently, Southwest Airlines announced that they would end all flights from SFO, citing delays as well as limited terminal facilities.20 The San Francisco Chronicle reported that, "the SFO pullout leaves United as the dominant carrier on the heavily traveled paths between Los Angeles International Airport and SFO."
Deregulation is always problematic when there are limited supplies of a product that is a necessity. Californians have learned this lesson first hand as a result of power deregulation (gas & electricity). The air transport system is a necessary part of our public transportation system and there are limits as to how many planes can use the system.
The airline deregulation during the past 20 years was designed to reduce prices and increase competition. The public has enjoyed low fares, but low fares have also led to the higher demand that strains the entire aviation system. In the long run, deregulation has not led to an increase in competition that favors the consumer. United Airlines is attempting to acquire U.S. Air, American Airlines is attempting to acquire TWA, and Continental Airlines, Delta Airlines and Northwest Airlines are looking into forming a marketing alliance. In the long run, prices may be on the rise.
If SFO had the right to reasonably regulate the airlines that operate from the airport, they could significantly reduce delays by pushing for realistic scheduling and increased aircraft size. The FAA has the ability to allow some controls while others may require action by our legislators.
19 U.S. Department of Transportation Enforcement Policy - Docket OST-98-3713, 1/17/01
20 San Francisco Chronicle, Southwest to Eliminate SFO Routes (1/23/01)