|5 Ways the Government Can Lower Airfares|
|By Rick Seaney, CEO of FareCompare||Aug 26, 2013, 11:30 AM|
Back in the '80s, President Reagan could always count on laughs with what he called the nine most terrifying words in the English language: "I'm from the government and I'm here to help."
American Airlines isn't laughing. Not after the recent government move to "help" consumers with rising airfares by suing to block American's merger with US Airways. I'm not taking sides but you have to wonder, where was all this "help" when Delta, United and Southwest were merging with other airlines?
Maybe the Justice Dept. has turned over a new leaf, rekindling its passion for the plight of us poor travelers. But why stop there? I have some suggestions for our ever-so-efficient policymakers on easing passenger sticker-shock.
5 Things the Government Can Do to Lower Airline Ticket Prices
1. Knock down the non-airline barriers to air travel.
There are so many barriers to a vibrant air travel eco-system and we need to start knocking them down now, while remaining as vigilant as ever over all aspects of safety.
• Delayed flights: Quit diddling around withNextGen and get it up and running everywhere, not just in an airport or region here and there.
• Security: It's past time to allow all airports that are so inclined to hire their own screeners (but keep them under TSA oversight). And let's get at least 50 percent of all travelers registered for expedited screening and let's not charge for this.
• Check-in times: Everyone's tired of getting to the airport so early; let's cut bag-free, pre-screened short-haul flyers some slack and allow them a 20-minute window to check-in.
• Immigration and Border Control: Implement special European Union-style lines for travelers from Canada and Mexico, and a workforce that offers a maximum wait time of just 30 minutes for all other arriving international visitors. Remember, Americans returning home from abroad get the same treatment as international visitors so let's make it easier on all of us.
• Passport: How about a free passport for every U.S citizen? Might as well toss in free renewal, too.
2. Establish a long-term energy policy that focuses on lowering fossil fuel costs.
No, it won't be easy but yes, it would help everyone. Certainly the airline industry, where at least one-third of the cost of an airline ticket is fuel-related. Implementing a long-term government policy where oil hovers at $70 per barrel would be a simple way to reduce prices, certainly quicker than waiting for widespread use of ultimately-cheaper bio fuels (still decades away) or having airlines buy oil refineries - as Delta did.
I know what you're thinking; what if the airlines don't pass these savings along to customers? But think back just five years ago as decades of fuel hedging paid off for Southwest as oil prices went sky high. It allowed the airline to resist all attempts at increasing prices while recouping their fuel costs despite oil prices going crazy.
3. Implement visa waiver programs with all countries.
I just got back from Asia and about 80 percent of the passengers on my flight home were South Koreans. I took some pride in all those international visitors heading to my country (not to mention the boost they provide to the U.S. economy) and I mentioned this to the general manager of American's operation at Incheon airport. He said demand has been rising and attributed a lot of it to the State Department's Visa Waiver Program which allows tourists and others to skip a lot of torturous red tape.
That's good for travelers and good for airlines too since higher demand translates into more flights. Problem is, the waiver program is only available to citizens in 37 countries. Why not open it up to all?
I do have one issue with the current visa waiver program, though: In order to take advantage of it, you have to go first go through the ESTA program (Electronic System for Travel Authorization) which includes a $14 fee. The fee is used for promoting travel in the U.S. If you ask me, visitors are the last people who should be paying this fee or as one critic put it, "It's like inviting folks to dinner and charging them at the door." Kick this fee to the curb and quickly.
4. Reduce airline ticket taxes (or a least quit threatening to raise them).
A $250 domestic airline ticket for a round-trip, connecting flight includes $60 in taxes and fees. That's 25 percent of the cost of the ticket! Yet what do we hear from the Beltway intelligentsia - the people who are supposedly so worried about higher ticket prices? Let's raise airline ticket taxes and fees! My response: Enough is enough.
5. Allow domestic U.S. airlines to have majority-ownership by foreign investors.
Virgin airlines have been winning fans around the world for years now, including U.S. discount carrier Virgin America. People swear by its high level of comfort and low prices. And yet Virgin founder Richard Branson had to jump through rings of fire (while dodging a pit of venomous snakes) just to get it up and running. Blame a Pan Am-era policy that has long outlived its usefulness and even the Dept. of Justice knows this, how vital competition is to air travelers. And there's your solution: allow more start-ups funded by foreign investors (even majority ownership). Throw in a newly-enlightened oil policy and watch things happen.
Don't worry, any and all airlines would still adhere to our government's world-class standards for safety so it would be a total win for travelers thanks to more airline choices. And we all know what happens when competition heats up: ticket prices go down.