Airline business booming, consumers getting short end of the stick

by Charlie Leocha on July 29, 2010


The International Air Transport Association (IATA) announced this week, that “international traffic on North American airlines grew nearly 11 percent in June.” At the same time virtually every airline reported earnings surprises to the upside in this still troubled economy.

The airlines are getting stronger. The consumer position is weakening. Here are some of the hits keep coming at passengers’ expense.

• Continental/United appear to be on their way to having their merger approved. The European Union (E.U.) has already issued an OK.

• American, British Airways, Iberia, Finnair, Royal Jordanian and others received antitrust immunity from the Department of Transportation.

• A government-approved oligopoly now controls more than 80 percent of all international airline traffic. These “alliances” are operating as independent joint ventures with separate executive and marketing arms.

• Airline capacity constraints are pushing load factors to record numbers, squeezing more passengers into already crowded planes.

• New fees seem to be added to the airline cost structure every week. Some of the latest permutations are now fees to avoid fees as well as a new class of exemptions to fees.

• Airlines still refuse to file their fees at the same time that they file their airfares. In fact, airlines refuse to allow any travel agent to view up-to-date fees or to sell any of the ancillary products.

• International airlines, especially BA, are facing continued labor strife. This is making international flights uncertain. Domestic airlines such as AA are also facing labor actions.

• European air traffic controllers are continuing a series of seemingly random strikes that are wreaking havoc with connections between European flights.

• Bumping is hitting new highs for the last decade.

• Airlines are failing to refund taxes on unused non-refundable airfares. They simply confiscate your money without forwarding it to the government or giving it back to passengers.

• More regional airlines are being spun off from the major airlines, creating two classes of air transportation within our country.

• Frequent flier benefits are being trimmed and co-pays for upgrades are proliferating.

Within this environment, the airlines are making hay, lots of it, to the tune of hundreds of millions of dollars.

Airline executives are ebullient.

Customers are suffering.

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