Corporate Buyers Promoting Air Competition And Policy
<B> Corporate Buyers Promoting Air Competition And Policy</B>
By Kevin P. Mitchell
<i>Kevin P. Mitchell is chairman of the Business Travel Coalition, which is based in Lafayette Hill, Pa.</i>
As the 20th anniversary of airline industry deregulation approaches on Oct. 24th, and the 105th Congress draws to a close, it is accurate to state that airline industry competition issues have received significant government scrutiny during the past 24 months. Corporate travel executives played a central role, but more importantly, some of these travel executives are advancing a powerful new model for bringing the long-term cost of business air travel under control.
The pioneers are General Motors and Chrysler. They are combining customer advocacy at the federal government level with customer intervention in the supply side of the marketplace at the local level. In this article I will explore this model, as well as what is at stake for corporations as we look beyond the 20th anniversary of deregulation.
Unfortunately, corporations' interests were not effectively represented in Washington, D.C., during the first 20 years of deregulation. For example, in the 1980s federal regulators had a near-perfect record in approving scores of proposed airline mergers. Today, CEOs are increasingly concerned about supra premium business airfares at fortress hubs, but are unaware that their corporations had no voice in these merger decisions.
What's changing is that corporate travel executives are at last advocating the interests of their corporations in matters concerning federal policy and industry structure, and practices. When Bell Atlantic, Black & Decker and several other corporations hosted the first BTCC Air Competition Summit 18 months ago in Washington, D.C., pundits quickly dismissed their objectives. But today, the U.S. Department of Justice has two investigations of airline marketing practices under way: the Department of Transportation is finalizing competition guidelines, and Congress is poised to enact legislation to loosen federal restrictions on competition.
Recently, DOT assistant secretary Patrick Murphy Jr. pointed out that, "In just 18 months Chrysler, General Motors and other Business Travel Coalition corporations have made an undeniable impact here in Washington, D.C., on air transportation policy. It is vitally important that the corporate customer remain engaged in federal policy issues that ultimately impact the cost of business travel."
Some travel executives today are being further recognized for combining their knowledge of industry competition issues with current marketplace intervention strategies to ensure adequate competitive alternatives.
Congresswoman Louise M. Slaughter, (D-NY) said, "Chrysler and General Motors are models of customer leadership in the air transportation industry. The positive impact they are having through initiatives such as the Pro Air agreement is recognized here in Washington, D.C., and should be an inspiration to communities across the country."
The voice of the corporate customer could not be growing at a more critically important time. The upcoming 106th Congress will consider legislation of perhaps greater impact on the long-term cost of business travel than all the deliberations of the first 20 years of deregulation combined. Key committee chairmen have cited their interest in accomplishing positive results for the air transportation industry, and some are calling 1999 "The Year of Aviation."
Compared with the scope and scale of airline industry legislation likely to come before the next Congress, the recent debate over competition levels likely will seem as if it were a mere warm-up exercise--the stakes will be huge. Below are just five of the numerous issues likely to come before Congress that will profoundly impact the cost of business travel for decades to come.
1. Moving the Aviation Trust Fund "off budget"--making available billions of dollars for infrastructure investment.
2. Restructuring the Federal Aviation Administration as an independent, private sector-controlled enterprise; determining its long-term financing strategy--excise tax vs. user fees.
3. Providing new entrant airlines with expanded access to domestic hub airports--slots, gates and other essential facilities.
4. Permitting foreign ownership control of domestic airlines--"Virgin America."
5. Increasing Department of Transportation authority over proposed domestic airline alliances.
Millions of dollars will assuredly be invested in lobbying efforts to ensure that some industry participants are disproportionate beneficiaries of the 106th Congress. But corporations must protect their interests and effectively advocate policies that further loosen federal restrictions on competition and prevent additional industry consolidation.