Why do airlines hate competition?

787 Sunset departure-1748

In my experience, whatever the airlines and its unions don’t like is normally good for consumers.

This time their target is Norwegian Air International (NAI).

Norwegian Air Shuttle, a low-cost carrier and the parent company of Norwegian Air International, has already begun service to the US. It has routes landing in New York, Los Angeles, Fort Lauderdale and Orlando. As it seeks to expand its low-cost service, it is facing a barrage of criticism and political pressure from airlines and their unions.

Anyone listening to the airlines and their band of unions might think the sky was falling.

And it may be — for international airlines.

Once Norwegian reaches critical mass of aircraft and it begins widespread advertising, mainstream airlines have reason to be afraid.

The airfares (including mandatory taxes and fees — thank you DOT) are eye-popping — far cheaper than one would expect for “normal” priced tickets to Europe.

Check these advertised prices out:

✓ Oakland to Oslo, round-trip, non-stop from $488
✓ Oakland to Stockholm, round-trip, non-stop from $508
✓ New York to London, round-trip, non-stop from $518
✓ New York to Oslo, round-trip, nonstop from $422

With prices like these, youngsters and families can take a vacation on flights that end up costing less than about half of what the mainstream airlines are charging.

Of course, the other airlines are used to jacking up their prices because there is virtually zero competition.

Only three alliances compete against each other across the Atlantic. Oneworld, Star Alliance and SkyTeam control about 85 percent of transatlantic traffic. And, most of these alliances work more closely than consumers realize, with antitrust immunity that allows them to legally collude with their alliance partners and share revenues.

Now, along comes Norwegian with a creative organization plan that allows them to take advantage of a very liberal open skies treaty between Ireland and the US, pilots from Thailand and flight attendants from the US.

Open skies together with cost advantages and new fuel-efficient planes will provide the first effective competition since major airlines squashed Laker Airways more than 30 years ago. So, Norwegian is bearing the full brunt of airline and airline union lobbying attacks.

Never mind that at each step of the way Norwegian has passed legal muster — in Ireland, with the European Union and in Norway. Never mind that pilots who are complaining are enjoying an international shortage that will not allow Norwegian to strike any real bargains with pilots. Never mind that Norwegian is already flying 20 million passengers each year safely across the world. Never mind that Norwegian is flying Boeing 787 aircraft on these routes that are providing thousands of American jobs.

According to the airline and union talking points, Norwegian is an unsafe, unscrupulous airline that is taking advantage of the law to compete with the giant worldwide airline alliances.

I guess they learned their craft from America’s scrupulous, honest, high-paying, consumer-friendly, market-driven airlines.

Whoa, I can barely write that with a straight face when these same airline lobbyists are busy making bald-faced lies about DOT rules written in black and white in the Federal Register. I can assure readers that these same airlines who can parse “yes” to mean “no,” tell passengers that their own fees are mandatory government taxes and who lie about pricing have proven that they are not to be trusted.

I have not extensively studied Norwegian Airline’s situation and its carefully constructed legal framework; however, if the airlines and their unions are howling, my instincts tell me that it is probably good for consumers.

DOT, like the authorities in Ireland, should stand on the side of passengers and more tourism, rather than shut down competition.

Are airlines afraid of real competition?

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  • SumGuyOnline

    Low cost carriers entering the international market can only be good for consumers. We have one in Canada called Air Transat that offers very cheap seats from Toronto to European destinations. The business model obviously works evidenced by their full flights, and it has kept downward pressure on the national airline on those routes.

  • http://elliott.org Christopher Elliott

    I think competition is a good idea. Wasn’t that the whole idea behind the Airline Deregulation Act — to increase competition? I wonder if this is what they had in mind: a de-facto oligopoly, and airline alliances that dominate on key routes. Oh well, maybe it’s time to try again?

  • John Baker

    I’ve read some of the “original source” material about this in the past. Its a really interesting business model with a global instead of a national view. Base yourself in a low cost, business friendly country. Hire your employees from lower cost countries and pay them market rate there to get high quality low cost employees compared to highly unionized countries.

    Can’t wait to see how this works!

  • Airline Observer

    So NAI enters the transatlantic market with rock-bottom base fares and a menu of extra fees for baggage, meals, seat assignments, credit card booking fees, etc., and that’s “good for consumers.” I agree. Spirit and Allegiant, and now Frontier, take the same approach to the domestic market (high density seating, low base fares, everything costs extra) in an environment where the competition is raising fares. Do you think these U.S. ultra-low cost carrier models are “good for consumers” too?

  • BobChi

    They are great for consumer choice. If people like their model they’ll fly them; if not, they won’t. Let the traveler decide.

  • BobChi

    A frequent critic, I can’t agree more with Charlie Leocha on this one. I’ve flown Norwegian, and it’s a perfectly solid carrier with a business model that often makes for lower prices. Why the other airlines don’t want its competition is obvious – it will be bad for their business. I wish Norwegian every success as it builds its presence in the U.S. and elsewhere.

  • http://elliott.org Christopher Elliott

    Allegiant, Frontier and Spirit are great in that they keep fares competitive. As a consumer advocate, I feel they have a little work to do in the service department. I mean, come on — charging $100 for a carry-on. That’s as absurd as it sounds. That’s where intelligent regulation can be helpful.

  • wiseword

    Laker was wonderful. It attracted experienced travelers, both older people and backpackers. No crying babies, no crude slobs.