[jimworcs]

Ok guys, now we seem to be getting somewhere in this debate. Lets take the issue of monopoly first.

As for the "fortress hubs" being monopolies, I still don't buy it since the airline has no real say over who can compete with them. They have no real way to stop them other than offer better prices and service and out COMPETE them. The very fact that the have to compete means it's not a monopoly

This is a common misconception of what a monopoly is. Monopoly power does not mean that there is no competition. However, it does mean that the barriers to entry for any new competitor are such that competition is severly limited. Delta has such a huge position at ATL, to compete effectively any entrant would have to be able to offer the high number of time options, connections, etc that Delta do. The cost of entry to achieve this is so high, and their lock on favourable leases and gates so strong, that this is prohibitive. This is the very meaning of a fortress hub. Therefore, competitive airlines instead compete at the margins.. low costs targeting leisure travellers where timings are less important or point to point competition on heavy routes. There is no substantive competitor to Delta at ATL.

Let us look at another example. In the bilateral agreement between the EU and DOT relating to access to London Heathrow, the stalling point was access by other carriers to LHR slots. The US DOT argued that BA operated a monopoly position at Heathrow which acted as a deterrent to entry for any carrier, as the launch costs and through traffic limited the capacity of other carriers to compete effectively. They require BA to relinquish slots and open the access to any carrier as part of the extension of Open Skies. BA had 41% of the slots at LHR in 2009. As a point of comparison, Delta in 2009 carried 73% of the passengers travelling via ATL.

First it's more regulation, now you've flip-flopped and are calling it less regulation. Make up your mind.

My point Judge is that the airlines enjoy exemption from existing regulation. I am arguing that we remove their exemptions. In that respect, we are removed special regulation treatment for airlines, but the effect would be that normal competition rules would apply to them. Is that any clearer. You ready to vote for me now?

With the way the industry is currently functioning, it would take MAJOR restructuring of flight schedules, maps, plans, etc, etc. What happens if no one wants to fly to BZM and only 2 airlines end up serving the airport? Then you've got a breach of rules on your hands since they both would have 50% of that market. Would you force all the airlines to fly everywhere? How would you solve that?

One of the most difficult tasks in dismantling monopolies is how to achieve the restructuring. This would take time and have to be carefully managed. I would suggest that we have a 5 year plan which progressively strips away the protections. Given that the large legacies have a large number of slots at a number of hubs, the process would be a "slot swap" process and an auction process. This has been done in both the US and in Europe. The slot swap would be similar to the swap that recently took place relating to La Guardia, but might for example involve AA trading some positions at Dallas with say US Airways at Denver, who also swap with Delta at ATL. In addition, new entrants would be encouraged by packaging slots at airports which are over-served, such as JFK, by auctioning slots for 5 or 7 year periods. This would allow new entrants for example Virgin America or foreign entrants if allowed to target particular markets and make a meaningful entry.

The big fear is that there will be massive job losses. In fact, the experience of all industries which dismantle monopolies is that new, innovative services come in and employment increases. However, the management of the transition over 5 years should reduce the "shock" effect, similar to how deregulation of the communications industry was managed.

Chapter 11 is controversial "shelter" which is cynically used by management to rip up labour contracts, screw suppliers and avoid the consequences of their irresponsible market behaviour. It is badly in need of reform. There is some case for a "bankruptcy" shelter to enable an industry to manage exceptional market shock or for community benefit. For example, allowing a hospital in a rural area to file Chapter 11, to try to protect the services for the community. There is no such requirement for airlines. If Delta had been allowed to fail, those routes would have been snapped up in no time. When Europe decided to allow airlines to fail, the same arguments were used. After they began to fail, it quickly became apparent the world didn't end. Even some large, well established airlines have been allowed to fail (Sabena, Swiss for example). No one could argue that the air market in Europe was devastated by this.