ATW Editor's Blog

President Obama is wrong on airline competition; did he also plagiarize Tony Tyler?

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US President Barack Obama has weighed in on airline travel and borrowed a line from former IATA director general Tony Tyler that completely upends Tyler’s famous mantra that airlines are a “force for good”.

Obama dedicated his latest weekly public address to the topic of airlines. He was touting a new proposed US government rule that was announced last week and which would mandate that airlines fully refund a checked baggage fee if the bag was “significantly delayed”. Work now has to be done to define what constitutes a “significant delay”.

The announcement, made at the White House and led by transportation secretary Anthony Foxx, was headlined as a move to increase competition in the US airline industry I wrote a blog last week pointing out why the proposals have nothing to do with competition.

Obama summed up the new regulations. “First, we’re proposing refunds for anyone whose bag is delayed – because you shouldn’t have to pay extra for a service you don’t even receive.  Second, we’re requiring airlines to report more information on things like how likely it is that you’ll lose your luggage or reach your destination on time.  Third, we’re providing more protections for travelers with disabilities.  And finally, we’re ramping up transparency requirements for online ticket platforms – so sites can’t privilege one airline over another without you knowing about it.”

As I wrote in my blog, none of these measures will improve competition. They simply slap a uniform compensation or administrative process on to all airlines. In an open, competitive market, rival companies work to win more customers and business by delivering their best service and, when things go wrong, offering the best compensation. Government interference at this level simply makes everyone do the same, which is the fast route to mediocrity.

The President described the proposed new rules as “another example of how government can be a force for good”. Anyone in this industry knows that former IATA DG Tyler coined the phrase “force for good” to describe the value that airlines bring to people and economies, and he made it his mantra through his tenure. So much so, that at the conclusion of the last IATA AGM under his leadership, he was presented with a custom-made trophy of the words “Force for Good”.  

Whether intentional or inadvertent, Obama’s use of the line is opposite to Tyler’s meaning. In many of his speeches worldwide, Tyler wanted governments to understand that misguided over-regulation and unfair taxes and fees could harm the full economic and consumer benefits that airlines can bring if, like other service industries, they are allowed to freely compete.

A telling line in Obama’s address was this: “our airlines employ a lot of hardworking folks … we’re proud of them”. Who is “us”? The government? DOT? The traveling public? This seems to overlook the important fact that US airlines are private companies; it could even mislead the public into believing they are still government-owned. They are not “our” organizations for “us” to be proud of. It’s for airline employees and leadership to be proud of their work and when they are, you can bet the passenger is probably happy also.

Obama then goes on to say “we all know that the system can work a little better for everybody.”

So how about the “system” that is the partially-government owned Amtrak rail service, which has lower rates of on-time performance and safety, and certainly lower levels of customer service, than any of the US airlines? Or Washington DC’s Metrorail system, which is now under a massive, emergency repair program after several collisions and derailments that killed and injured passengers and employees?

The President laments that come next year, he will miss the perk of having his own plane “a lot” because he knows “what a pain” the process of flying coach can be. I suggest if he really wants to experience pain, he takes the train.

Karen Walker  Karen.walker@penton.com

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