The loyalty factor

Posted at 12:55 PM on March 20, 2008 by Bob Collins (0 Comments)

If ever we needed a lesson on how competition can benefit consumers, Air Tran and Northwest Airlines flights to Chicago provide a terrific example.

AirTran, the cheap-fare airline, competed with Northwest on flights between Minneapolis St. Paul and Chicago's Midway airport.

Northwest, which has littered the ground with airlines that tried to compete with it in Minnesota, matched the fares AirTran offered.

Consider, for example, a flight booked today for April 1 between Minneapolis-St. Paul and Midway. Northwest is currently charging $114 round trip.

AirTran does not fly to O'Hare airport in Chicago. A flight on the same day as the one above to O'Hare will cost you $384 roundtrip.

O'Hare is 14 miles from Midway.

Today, reports MPR's Marty Moylan, AirTran has announced it will end its Chicago run, owing to high fuel costs and the fact the route isn't performing "as expected."

"That's too bad because I'll tell you what, they are the only guys that are keeping Chicago reasonably priced," said Hobbit Travel Agency owner George Wozniak said. "Once you turn it over all to the legacies, then fares go way up."

Given a choice, Minnesota travelers will choose Northwest Airlines most of the time, despite occasional calls around here for more competition.

Consider, however, a poll question we asked in 1998, when the Northwest pilots went on strike for 15 days:

In the past, smaller airlines from time to time have offered service on some Twin Cities routes that competed with Northwest but then were forced to drop that service when Northwest reduced its fares on the same routes. Do you think it would be a good idea or a bad idea for the federal government to intervene and protect the smaller airlines, allowing them to continue offering service that competes with Northwest?

Sixty percent of the respondents said it was a good idea to have the federal government intervene to provide competition. Yet in the same poll, 79 percent said they were not likely to fly Northwest any less after the strike.

What they were asking the federal government to do, they could have -- more easily and cheaply -- done themselves. That's the funny thing about choice.

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