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The "New" Paradigm

Local officials see few solutions to the issue of Delta's highter fares.



Probably no local official has experienced more frustration over high Delta airfares than 9th District congressman Steve Cohen, who serves on the House Transportation Committee and on its airlines subcommittee but, as a member of the minority party these days, finds that his ability to force action on the majority Republicans who control the House is limited.

Because of his committee assignments, Cohen took some early hits on the "Delta Does Memphis" website, including one from Democratic primary opponent Tomeka Hart and others from commenters he suspects of being politically motivated. He brands as a "falsehood" someone's widely circulated tweet that he "didn't want to be involved." He says he's had numerous and frequent conversations about the fare problem, especially of late — with Delta, with possible competitor Southwest Airlines, with airport authority head Arnold Perl, and with various business leaders.

Cohen said last week he'd told Delta that "a lot of prominent people and just regular people are complaining and that I'd like to know if they can do anything at all to reduce the fares. The odds are, they're not, because they're in the business not to take care of Memphis but to take care of Delta stockholders. The truth is, it's an issue dependent on market conditions. Since deregulation, there's not much you can do about it."

At a subsequent press conference with reporters at his home, Cohen was candid about there being few legislative avenues for correcting the fare problem. Like other informed observers, he saw competition as the basic answer. 

Like many others, Cohen invests hope in low-cost carrier Southwest as a competitor with Delta, but, conspicuously, he is no Pollyanna. As he sees it, Southwest, which operates several flights in Nashville and Little Rock, won't do much in Memphis before 2013, when it takes over a few prior connections here of Air Tran, the budget line Southwest has merged with. Bluntly, he says, "They're not coming here in a big way" but will essentially connect travelers to Atlanta. Maybe Southwest could be induced to add a flight to Midway in Chicago. "That's nice, and Chicago is a great city, but it's only one city."

Cohen said he had asked his staff to look into remedies available in existing antitrust laws but doubted that the GOP majority would permit any new legislative remedies. Hearings in Washington were at the discretion of the majority party, but: "We could possibly have some type of hearing here in Memphis. Whether Delta or Southwest would lend their voices and participate? They've both been invited and have not indicated whether they would."

The fare issue here is similar to what exists in other markets where a single airline maintains a "fortress hub" with the ability to overpower smaller lines, matching their rates if need be before driving them out, Cohen said. "It's a predatory pricing situation, one the Justice Department hasn't pursued. We've had deregulation for 30 years. It's caused airlines to merge down to only three major carriers. There's also the cost of fuel. But as airline fuel goes down, they don't reduce their fares or increase their service."

Cohen touted USAir's Washington-to-Memphis service, which he used twice last week. "Their fares were cheaper than Delta. They were small planes. Their planes were full. It's competition that will work. And I encourage that and continue to encourage it."

Public pressure on Delta like that from "Delta Does Memphis," which Cohen himself now contributes to, is helpful, but action from key business leaders would be more so, Cohen said. Meanwhile, he pledges to stay on the case himself. "I've been on this subject long before Debbie did Memphis or Delta did Dallas or whatever. I was there."


Memphis mayor A C Wharton: "It's a given that everybody wants lower airfares, and this is why I'm pushing the airport authority to get more competition in here. We're working feverishly on the Southwest operation. We've just gotten the USAir three flights a day to Washington. So competition is the answer. We will never ever be able to regulate ourselves into a lower airfare, at least not at the local government level. I'm going to tell everybody, there ain't nothing I can do about that. Ain't nothing the city council can do about that. The competitive forces will have to drive that, and we can talk and talk and talk and talk, and, until the folks who run the airlines see that they can make a profit on it, things are not going to be improved. And this is why we've got to get competition in here. That's the only answer.

"[Southwest Airlines has] got the regulatory clearances that they need. I understand that when you merge two airlines, you've got to make sure that you get it right. If you don't get it right and the customers become dissatisfied after two or three flights, they're going to find other carriers. So what I understand is, it's just a matter of getting it right. There are no legal barriers to Southwest coming in and taking over [from] Air Tran. That's on the way now."

Tennessee governor Bill Haslam: "You can actually fly from Knoxville to London cheaper than you can fly from Knoxville to Memphis. So I think there are some issues. As a state, we don't have any authority over their pricing policies. I think that's one of the reasons we've always tried to encourage low-cost airlines to be here in Tennessee, because it does impact businesses as well as families and individuals who want to travel. It does impact our economic development when it costs folks a lot to fly in or out of our cities, so we're working on it. Again, we don't have any pricing authority that we can do with airlines. But it is an issue."

Shelby County mayor Mark Luttrell: "I'm concerned as everyone should be about high airfares here. I understand that it's a combination of things. I've heard a lot about the cost of fuel, but everybody's experienced the cost of fuel, so I don't think that that, in and of itself, is the reason. One of the reasons I hear is that we have such a low percentage of origination here in Memphis. Most of our traffic is people passing through, making connections. And how you attack that problem, increasing the city's originations, comes with just trying to get more competition from other airlines in here. I don't think I'm saying anything here that's fundamentally different, that competition might help matters. But it's evident right now that, with our lack of competition, Delta doesn't feel compelled to address their flights."

Tennessee Senate majority leader Mark Norris: "The last two weeks I've concentrated on getting the price of gasoline down. Now that I've taken care of that, people are asking me to look into diesel prices. I'll get to airline fares just as soon as I can."

Chamber of Commerce president John Moore: "We're asking airlines in Memphis to expand in a contracting industry. Airlines today are more risk-averse than they've ever been before, because fuel prices are so volatile. You might take 18 months to look at a market and analyze it and watch what other airlines are doing, finally make a decision based on assumptions. You make an announcement to fly in there, and suddenly all the assumptions change. 

"This is not the only market where this is happening. Fares in general are increasing 26 percent. All the markets are dynamic. You're looking at a different world now with bigger airlines, less service, higher fares. That's the new paradigm."

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