Loss of airline competition costs Pennsylvanians

You don't need to leave Pennsylvania to see how consumers suffer from the sorry state of airline competition across much of America. Buy a round-trip ticket from Philadelphia to Pittsburgh, as I did recently for close to $600, and it's painfully obvious.

Tuesday's antitrust lawsuit seeking to block US Airways' merger with American Airlines, even if it succeeds, won't solve that particular problem. With or without American, US Airways currently enjoys a monopoly between Pennsylvania's leading cities. As monopolists do, the carrier cashes in.

But the ups and downs of the Philadelphia-Pittsburgh airfares could be Exhibit A in the case against any further airline consolidation. That's why Pennsylvania Attorney General Kathleen Kane called attention to the route after she and her counterparts in five other states joined Tuesday's U.S. Justice Department lawsuit.

In the 35 years since the United States deregulated its airline markets, carriers and competition have come and gone. If US Airways and American combine, the nation will be served by just four major carriers: the last of the three "legacy airlines" - Delta, United and American - plus Southwest, the prototype "low-cost carrier."

As Southwest has proved in the Philadelphia market, where it expanded and then pulled back, competition can be fleeting in an industry that can shift its key assets - aircraft - at will. And monopoly is a lousy alternative.

Prices dropped when Southwest entered the cross-state route, with one-way fares averaging well below $100 for most of 2006 through 2010. When US Airways regained its monopoly, they more than doubled. Since early last year, an average round-trip across Pennsylvania has topped $500, according to federal data.

Traffic on the route has plunged as a result. Fewer than 40,000 passengers per quarter have flown the Philadelphia-Pittsburgh route this year, compared with more than 100,000 per quarter before.

Bill Baer, the assistant U.S. attorney general who took over the antitrust division last year, said Tuesday that the merger threatens consumers with a long list of harms, including the loss of competition on thousands of routes where American and US Airways now compete head-to-head. The Philadelphia-Miami route, for example, would go from two nonstop carriers to one.

Baer also warned that travelers would likely lose a benefit that Philadelphia consumers rarely see because we travel from one of US Airways' hubs: US Airways has become an aggressive discounter on connecting flights through those hubs, cutting prices up to 40 percent against other carriers' nonstop flights.

Duke University economist Andrew Sweeting said US Airways adopted the strategy to increase traffic through its smaller-city hubs - a motivation likely to disappear after a merger with American.

He has studied previous mergers' effects on fares between merger partners' hubs, such as flights between Houston and Denver or between Atlanta and Minneapolis. The result? Fares have risen an average of 5 percent to 15 percent, he said.

It's not rocket science why airfares wax as the number of carriers wanes. The question for three decades has been how to promote competition as an antidote - especially when antitrust enforcement turns lax, as it did under President George W. Bush, and legacy carriers vanish.

"The prior administration whiffed with the Delta-Northwest and United Airlines-Continental mergers," said David Vladeck, a Georgetown University law professor who headed the Federal Trade Commission's Bureau of Consumer Protection during President Obama's first term. "You now have two antitrust enforcement agencies that are serious about protecting consumers."

The Justice Department sues to block a merge between US Airways and American Airlines. A1.