Northwest attacks government plan to stimulate airline competition

WASHINGTON (AP) — The Clinton administration’s plan to help upstart airlines compete against the big carriers will make it harder for travelers to find discount fares, Northwest Airlines told lawmakers on Thursday.
“Senior citizen discounts will be at risk, Internet cybersaver fares will be at risk. Bereavement fares will be at risk. Supermarket discount coupon fares will be at risk. Free and deeply discounted seats for infants will be at risk,” Northwest executive Richard Hirst told a Senate aviation subcommittee.
Upstart carriers say big airlines such as Eagan, Minn.,-based Northwest have tried to drive them out of competing markets by cutting fares below cost and adding flights. The major carriers deny the charge.
But the Transportation Department earlier this month announced rules that would block major carriers from adding flights or cutting fares to more customers than a startup carrier could serve.
So if Northwest offers 1,000 seats a day on a route and a new competitor has 400, Northwest could match the rival airline’s fares on only 400 seats. Carriers that violate the rules could be fined $1,100 a day.
Low-fare carriers can’t survive unless the government draws a line between “vigorous competition and predatory behavior,” said Mark Kahan, vice chairman of Spirit Airlines who was seated next to Hirst at Thursday’s hearing. Spirit is a competitor of Northwest.
“We don’t want to be pushed around by the bully. We want to stay around and fight,” he said.
Spirit contends it was forced to drop service from Detroit to Philadelphia and Boston when Northwest sharply cut fares and added flights on those routes. While Spirit was competing with Northwest, fares dipped sharply. They’ve since gone back up.
Northwest and Spirit still compete on flights between Detroit and Florida, but Northwest has recently increased service between Detroit and Fort Meyers, Fla., by as much as 75 percent, Kahan said. “I think they’ve gotten the impression we’re going to be around for a while and have gotten serious,” he said.
Hirst said Northwest added the flights because of the heavy demand on the Detroit-Fort Meyers route.
But the man who is considered the father of airline deregulation, Alfred Kahn, is taking the side of the upstarts.
Northwest and the other major carriers already restrict discount fares, so it’s hypocritical for them to complain that the Transportation Department rules would limit the number of such fares they can offer, said Kahn, an economist who headed the old Civil Aeronautics Board when the airline industry was deregulated in 1978.
Congress is facing mounting pressure to stimulate competition in the industry. Several bills have been introduced to improve service and fares in small and medium-size cities.
At a House Transportation Committee hearing earlier Thursday, Rep. Jim Oberstar, D-Minn., warned airline executives in the audience: “If you think what’s before us today amounts to re-regulation, you ain’t seen nothing yet if this continues. I think the airlines are playing with fire.”