Tuesday, February 12, 2019
TKC EXCLUSIVE!!! INSIDER: AIRLINE CARTEL THREATENS TO SPIKE COSTS AT PRICEY NEW KANSAS CITY AIRPORT!!!
Not only does the proposed new Kansas City airport threaten to borrow big bucks from taxpayers to start but also there's a question of how the proposed "deal" will impact local air travel.
To wit . . .
RIGHT NOW INSIDERS REVEAL HOW NEW KCI THREATENS HIGHER PRICES AMID DECREASED AIRLINE COMPETITION!!!
As usual, quasi-privatization by way of City Hall translates into nothing less than an opportunity for more corporate welfare paid for by locals and anybody unfortunate enough to pass through this cowtown.
Hello to The New KCI Air Cartel
KCI is selling a monopoly to the highest-bidding airlines cartel. Bait for air carriers to pick up four billion dollars of new airport bond debt. It’s part of a national trend turning medium-size airports like KCI into airline cash cows. Airlines achieve rising profits by driving up ticket prices at captive regional airports, off-setting lower prices at highly competitive major hubs.
“In other industries where a few large firms dominate (think Coke and Pepsi) they may still compete fiercely with each other in every city and town, but when consolidation occurs among airlines it often leaves local communities completely dominated by single carrier or cartel of common owners….This interlocking, common ownership structure of airlines, which is akin to the giant investment banking trusts that gained control of the railroads and other key industries in the late 19th century, means that even nominally independent airlines have strong incentives to avoid competing for market share. One study comparing fares on routes served by airlines with and without common owners finds that the horizontal ownership structure that pervades the U.S airline industry raises the cost of flying by 10-12 percent.”
Even the Feds are taking notice:
“The Justice Department notified the four largest airlines June 30 that it is investigating whether they are colluding to drive up fares by limiting the availability of flights and seats. Those four control more than 80 percent of the U.S. market.”
This case resulted in one of the New KCI players "flipping" on the other three airlines and paying a BIG MONEY settlement.
A “cartel of common owners” (Residual cost partners) can drive up ticket prices in a variety of ways. It can reduce flights to the most profitable routes. It can manipulate access to gates and baggage handling. Remember the curious report that a 20-million-dollar baggage system was stalling the KCI airline agreement? If you can force competitors to pay more for bag handling, you can make them charge higher bag prices, undercutting their ability to offer lower ticket prices. Likely this was a fight over who controls the new airport’s one-and-only baggage system, not the relatively trivial cost.
The city promises a signed airlines agreement will be in hand by Feb. 25. Eight airlines currently carry most KCI passengers. Let’s see if a substantially smaller number ink the agreement. If they do, that’s not a promising development for air travelers.
Developing . . .