ATW Editor's Blog

US airline profits up; regulators on the witch hunt

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Airlines that are well managed and profitable are good for everyone. Good for the carriers and their employees, good for shareholders and also good for consumers. It’s the last part that Washington DC doesn’t get, as illustrated by this summer of regulatory witch huntery with profitable airlines in the crosshairs.   

When airline management isn’t forced to chase market share or focus on business survival and how to raise cash, it can turn its attention to growth strategies, and customer service and product improvements. Employees who enjoy more job security and see decent career paths are more likely to also enjoy their work and give better service. And a healthy airline with regular, reliable service is a boon to any country’s economy, most especially to the cities it serves.

So the generally good financial reports from US airlines this second quarter should be welcomed by their employees, customers, businesses and, actually, the government.

But what are we seeing instead, at least on the regulatory side? The Justice and Transportation Departments have now both launched investigations into certain US carriers; DOJ questioning whether certain majors have colluded in their capacity planning (a notion I personally find ridiculous) and DOT examining whether certain airlines price-gouged people after the Amtrak crash near Philadelphia in May, which temporarily shut down an important rail route.

The confluence of these investigations and US airline record profitability may be coincidental, but my suspicions tell me otherwise. US regulators and policymakers have a long history of disliking US carriers when they make money and of treating them as if they were publicly-owned utilities.

It’s absurd that DOT is wasting its time and resources – along with those of the airlines – on a price-gouging investigation when all of its focus should be on improving the poor customer service, on-time performance and safety standards of Amtrak and preventing more events like the Philadelphia disaster. If airlines were managed similarly, I doubt many people would want to fly. And then the government would be back to discovering how bad it is for passengers (including all those flying congressmen) and the economy when the airline industry is losing money.

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