We’re Being Robbed Every Time We Fly

There’s a stunning lack of choice for American consumers today, and nowhere is that more evident than in our nation’s ever-shrinking airline industry. According to a new report from the AP, the average roundtrip ticket to anywhere in the U.S. was over $509.15, including taxes, in the first half of this year. That’s up $14 from the same period last year.

The AP also points out that domestic airfare pricing is outpacing inflation, up 2.7% compared to the 2.1% increase in the Consumer Price Index. And, according to data from the Airlines Reporting Corporation, airfare costs have shot up 10.7% over the past five years alone. So, what’s behind these sky-high airfare prices?

Well, as the AP piece points out, airlines have discovered that thanks to the economic recovery, more people want to fly, so airlines have dropped the number of available seats on their planes, which all translates to higher ticket prices. The airlines are taking advantage of simple supply-and-demand economics. But that’s just one piece of the puzzle.

The real reason that airfare costs are so high is because of the stunning lack of competition in the airline industry today. Back in 2001, there were 10 major airlines flying through American skies: American Airlines, TWA, America West, U.S. Airways, Delta, Northwest, United, Continental, Southwest, and AirTran. All those airline choices meant more completion in the marketplace, which translated into lower airfare prices for American consumers.

However, slowly but surely, the competition in the airline industry has disappeared. In 2001, American Airlines bought out TWA. In 2005, America West bought up US Airways, keeping the US Airways name. In 2008, Delta officially began the process of merging with Northwest. In 2010, United and Continental announced that they were joining forces, and just a few months later, Southwest announced that it was taking over AirTran. And finally, last year, US Airways and American Airlines announced that they were merging to form the world’s largest airline.

So, in less than 15 years, the American airline industry has shrunk from ten airlines in the sky to just the big four that are left today.

Similarly, as the number of airlines has dwindled, airfare prices have shot up, because there’s so little competition in the marketplace. The disappearing competition in the airline industry isn’t just some strange phenomenon. In fact, this same sort of thing is happening in just about every other industry in America.

Look at America’s media and telecom industries. Back in 1983 - 90% of American media was owned by 50 companies. As of 2011 - that same 90% was controlled by just 6 massive corporations: GE - Newscorp - Disney - Viacom - Time-Warner - and CBS. Similarly, right now, there are just 10 giant corporations that control, either directly or indirectly, virtually all American consumer products.

And then there’s America’s banking industry. As Mother Jones points out, 37 banks and financial institutions back in 1990 have slowly transformed into the big 4 banks we see today (Citigroup, JPMorgan Chase, Bank of America and Wells Fargo). And we all know how much damage those big banks have done to the American economy.

From fewer airlines in the skies, to fewer banks on Main Street, competition has disappeared from the American marketplace, and it’s all because Ronald Reagan, in 1982, stopped enforcing the Sherman Anti-Trust Act. Ever since Ronald Reagan came to Washington, "mergers and acquisitions" became the main way to do business, and we’ve all suffered as a result, in the form of things like higher airfare costs.

The steady aggregation of big businesses taking over entire industries over the past 34 years in just about every major commercial sector has concentrated far too much power in the hands of too few players. Americans deserve choice.

We shouldn’t have to feel like we’re being robbed every time we fly home to see family members or jet off for vacations. And the only way to bring that choice back is by undoing the damage that 34 years of failed Reaganomics has caused, by starting again to enforce the Sherman Anti-Trust Act, by breaking up America’s giant corporations, and by thus bringing competition back into our marketplace.

Comments

Palindromedary's picture
Palindromedary 6 years 12 weeks ago
#1

Drive instead! Better yet...ride your bike across America. And an alternative is just to stay home and see the world through Google Earth! I'm just glad I no longer have to fly! It was really getting very sucky! And since MH17, I would never trust the airlines or our government ever again. I believe that MH17, as well as other airliners, were being used as a shield to sneak in Ukraine war jets into the conflict area. And I believe that powerful entities like the US encouraged Kiev to do this (change the flight path from over the Sea of Azov--200 miles south of the conflict zone---to over the conflict zone...it started on the 14th of July and continued on the 15th, 16th, and 17th when MH17 was shot down according to www.flightaware.com where they show the flight paths each day for each airliner. note: The new MH17 flights, since the crash on July 17th, now fly over the southern area of the Black Sea..about 500 miles from the conflict area in Ukraine. It doesn't even fly over the UKraine at all anymore).

GrowthBusters's picture
GrowthBusters 6 years 12 weeks ago
#2

I'm a little bit shocked to see you, Thom Hartman, wanting more people flying at lower cost. Much of the cost of flying is currently externalized (as in CLIMATE CHANGE). Do you really think we can have our cake and eat it, too? Unfortunately, we can't have 7.2 billion Earthlings jetting off on family vacations. Flying needs to become a very infrequent occurrence (I'm pretty sure peak oil is going to make the price of flying skyrocket very soon, which will take care of that). Wish it weren't true, but that's the price of the binge.

Dave Gardner
Director of the documentary
GrowthBusters: Hooked on Growth

Palindromedary's picture
Palindromedary 6 years 12 weeks ago
#3

Very good point Dave Gardner!! I mean GrowthBusters. People should just stay home and not waste so much fuel...especially flying...wastes a lot of fuel and pollutes the atmosphere.

By the way, It looks like British Airways is changing its flight planes...it will not longer fly over Sierra Leon and one other African country (Chad?) due to conflict zones.

Kend's picture
Kend 6 years 12 weeks ago
#4

More airlines means lower Prices. Thom are you saying capitalism works?

Maybe We should try that with schools. More options means lower prices. Our education system costs are going through the roof.

bobcox's picture
bobcox 6 years 12 weeks ago
#5

Please President Obama, reinstate the Anti Trust Acts! Break up the Airlines. Break up the banks. No company should be "to big to fail". Competition in the 60's was such tan I could fly from my home in New Jersey to Boston for $25.00. I could fly from Newark to Washington, DC for $25.00. A Boeing 707 cost about $7Million. Jet engines became less expensive in fuel costs.

It is now estimated that for a family of four to live in reasonable "middle" class they must have an after tax, state, Federal and local, of about $135K. The more affluent requires about $240K. In the UK.S. today only 1 in 8 families can meet the lower income values. The median income in Illinois is $57K (and change) and we have to pay taxes on most of the necessities of life, reducing the disposable incomes to almost poverty level.

Ou812's picture
Ou812 6 years 12 weeks ago
#6

you nailed it Kend...or try it with Health Care too:))

Greenthumb's picture
Greenthumb 6 years 12 weeks ago
#7

Yes Dave and Palindromedary - don't fly - for all of the reasons you have stated. I stopped completely 8 years ago after a grueling cross country flight in a plane where the air REcirculation system was malfunctioning (you don't get fresh air on flights because that adds to fuel costs to keep the passenger areas warm - they just blow the same germ laden, filthy air at you). All the passengers were choking, screaming for water and air. I had to take off my sock, wet it and hold it over my eyes, nose and mouth. I was horribly sick for about 3 weeks after with some sort of flu like thing. I will NEVER endure that again.

Tom - set a good example and stop jetsetting all over the place. While it's great to see you live, we hear you loud and clear through radio and internet. Thanks for this blog that let's us share our ideas.

DAnneMarc's picture
DAnneMarc 6 years 12 weeks ago
#8
Quote Ou812:you nailed it Kend...or try it with Health Care too:))

Ou812 ~ There are two big differences between the Airlines and Health Care. First Health Care is a vital human need, not an optional convenience. Therefore, like our water supply, it is and should always remain a part of the commons for optimal efficiency.

Secondly, unless you've been asleep for the last few decades, we have already tried the commercial corporate model for Health Care and it failed miserably to meet the common need. That is exactly why the people are demanding change.

Aliceinwonderland's picture
Aliceinwonderland 6 years 12 weeks ago
#9

But Marc, you don't understand. Her needs are being met. That's all that really matters. Right? Long as "Ou's" happy, we'd better back off and quit meddling with that wonderful healthcare system of ours. If tens of thousands of other Americans are dying each year, them's the breaks. If those people can't get access to healthcare, that's their problem. In America, we're on our own! Sink or swim! It's the American way! Keeps this country GREAT. Survival of the fittest! - AIW

Aliceinwonderland's picture
Aliceinwonderland 6 years 11 weeks ago
#10

Yeah Marc, we live an' learn.

Palindromedary's picture
Palindromedary 6 years 11 weeks ago
#11

Greenthumb: I had similar experiences on airliners. Once, what looked like smoke was coming out of the overhead ventilators..very disconcerting...but the pilot said not to worry...it was just condensation as we were descending and circling the airport for a landing.

Another time we had all boarded the plane at Phoenix airport and they announced that they had found something wrong with one of the engines and that we should all just be patient while the looked at the problem. It was so darn hot that we were all sweating profusely. We had to sit there for over an hour. They could, at least have had us go back into the air-conditioned terminal to wait.

Another time I was sitting near the window on the plane and the guy sitting beside me kept coughing and coughing...I kept thinking what if he had TB, or something, I tried to keep my face against the window with a pillow covering the side of my face closest to the person coughing.

Another time, as I was flying from Paris to Dhahran and passing over the med. sea approaching Egypt, two military jets buzzed us flying one on each side of our plane then shot off into somewhere else. I wondered if they were going to shoot us down. Could have been Israeli jets and I still remember the USS Liberty.

Another time when I was flying out of Bahrain, which was a short hop from Dhahran, Saudi Arabia (where I worked), on my way to Bangkok, Thailand, this drunken Saudi guy was loudly singing and banging the back of my seat. It was late and there was a lot of people on board trying to get some sleep, including me. I finally got ticked off and jumped up out of my seat and went to his and picked him up by his clothes and slammed him down in his seat and told him to shut up and quit banging my seat. I swear, now, the guy looked just like Osama bin Laden. Didn't even know about OBL back then but I've always wondered since...was that OBL? He did shut up and settled down after that and the stewardess came by shortly after that and thanked me! Liquor is not allowed in Saudi Arabia (although some people do sneak it in or brew or distill it themselves...as long as they are not caught). But Bahrain allows liquor and they have lots of bars especially in the airport. So a lot of people get drunk in Bahrain during the stop over. I would not have been able to get away with that action if we had still been in Saudi Arabia, though. I probably would have been thrown into prison for a while, then deported.

chuckle8's picture
chuckle8 6 years 11 weeks ago
#12

Kend -- You should listen to Thom more. He is a great supporter of the market place.

chuckle8's picture
chuckle8 6 years 11 weeks ago
#13

bobcox -- I think you mean to say enforce anti-trust not reinstate it.

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