• When Elite, Well-Connected Insiders Attack Consumers

    That should have been the title of a National Press Club event this past Friday.

    This past week, the Press Club featured three shining heroes of American crony-capitalist corporate oligopoly: the CEOs of Delta, United and American Airlines. Insiders love National Press Club events and this one had lots to love. An open forum for elites to read talking points and to make believe that it would be great for travel if the United States airlines were protected from free market competition.

    These three big airlines, making massive profits, needed a forum to make the case that competition will hurt their bottom line. Why would anybody suggest the domestic air carriers be forced to lower prices and compete against foreign air transport companies? Competition equals cost cutting and lower prices. With record profits, the big three airlines have a different plan – crony capitalism.

    Big Labor and Big Air have teamed up to oppose the free market in air travel, because they know they can get their friends in the DC media, on Capitol Hill and in the White House to use the power of government to protect them from foreign entrepreneurs.

    The elites love to lobby Congress and the White House for preferential treatment to protect their own interests. They don’t care that consumers have to pay more for smaller seats, below par service and airports that look like relics from the 1950s.

    The big three carriers admittedly don’t think much of each other when competing, yet they have teamed up in an all-out messaging crusade against international aviation free-trade agreements.

    Open Skies agreements are great for consumers and have functioned seamlessly and without controversy for three decades. The U.S. airlines were full and enthusiastic parties as they were being negotiated and they have afforded untold benefit to both travel consumers and the U.S. economy.

    The Press Club panel was a beauty of a latest fusillade, at which the Big Three presented their specious arguments attacking Open Skies and competition, in a forum supposedly dedicated to unbiased journalism. One thing missing — one opposing viewpoint. Bravo to the public relations firm who locked down a one sided and very biased event at the “National Press Club.” You can watch the propaganda fest here.

    Using “dog whistle politics,” the Big Three claim that some foreign competitors — the Persian Gulf carriers Emirates, Etihad and Qatar Airways — have received support from their governments that violates longstanding international aviation treaties, known as Open Skies.

    It apparently matters not that huge numbers of international carriers are either government-staked or government-owned, and would otherwise operate at a loss.

    Similarly irrelevant, it would seem, is that the Big Three themselves are the beneficiaries of many tens of billions of dollars in federal aid. The purest such assistance was cash payouts post-9/11. There are some good faith public policy reasons for the government bailouts after 9/11 but some have criticized bailouts and not every business hurt by that tragedy got a bailout from Uncle Sam.

    Among numerous more egregious handouts are sweetheart bankruptcy deals, way-below-market-value loans and pension bailouts that have dumped scores of billions in liabilities onto U.S. taxpayers. Yet again, the elites were bailed out after 9/11, yet the consumers were the ones who took all the risk and paid the tab.

    During the event, the elites did not handle this opportunity to message well. Delta’s Richard Anderson, who has shamed himself and his airline with some inflammatory statements. Doug Parker of American, claimed that Chapter 11 bankruptcy proceedings does not represent government aid (yes it does).

    Open Skies was not the only topic raised at the Press Club. The question and answer segment of the event brought the obvious question of why plummeting gas prices have not brought airfare savings to consumers. Doug Parker deflected the query in part by saying that antitrust regulations prevented him from delving into pricing issues in the presence of his two hegemonic cohorts.

    The big three — Delta, American and United — won’t quit the Open Skies battle. The resources they have to invest in protectionism is staggering thanks to repeated quarters of record profits. The same profits they seek to protect by gouging consumers. They don’t care what the public thinks; because they are using government to make sure they are the only game in town.

    American travel consumers need one thing from politicians in Washington. Don’t do the bidding of the airlines and unions. Take the National Press Club event for what it was, a glorified and well funded propaganda opportunity. It does not represent the will of the American traveller.


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    Cloakroom Confidential

    Cloakroom Confidential was a longtime Capitol Hill staffer and insider who has contacts in the House and Senate at the highest levels.

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