August 25, 2005
Minneapolis, Minn. — As you watch planes take off from the runway at the airport, it seems most of them bare the familiar red-and-white NWA logo. Maybe every 10th plane belongs to another airline -- United or Sun Country. Still, William Wren with the Metropolitan Airports Commission, says all the major airlines are represented at the airport, except for some low-cost carriers like Southwest.
"I think that there are a lot of options here," he maintains. "We are probably much more fortunate than most communities are since we do have such a wide range of opportunities and wide selection of airlines."
"Monopoly would be the best way to put it," counters college student Jeff Rood, who just returned from a trip to Tampa to visit friends. He flew Northwest.
"I did an Orbitz online-type deal to find the cheapest. And Northwest is always able to undercut," he says.
Rood's frustration at not being able to find better flights with Northwest competitors is because Northwest dominates this market since it's one of its three hub cities.
Northwest Airlines says its presence here is a good deal for Minnesota. Spokesman Kurt Ebenhoch says Minnesota travelers get better service because of Northwest. As evidence, he points to the Northwest flights to 170 cities around the world. He says the company provides nearly 15,000 jobs in the Twin Cities.
University of Denver geography professor Andy Goetz agrees with Northwest Airlines, but says being a hub city has a downside as well. The economy becomes dependent on the airline and suffers when it cuts jobs or has labor trouble.
The airline currently wants to cut its labor costs by $1.1 billion, and proposes cutting mechanics', cleaners', and flight attendants' jobs to do that. Mechanics and cleaners are on strike now.
But Goetz says there's another problem for residents here.
"The degree of control that that hub airline has over the market means that they have more pricing freedom," he says.
Because there's less competition here, travelers flying out of Minnesota pay 15- to 20-percent more for flights.
In the late 1990s the Department of Transportation was concerned about Northwest's aggressive business moves, that some academics went as far as to call predatory practices. Aviation analysts argued that Northwest kept smaller carriers from entering the Twin Cities market. This is what they described back then: a smaller carrier would start a new route from one of Northwest's hubs. Then Northwest would match those flights and cut the airfare. They also would go into the other markets where that competitor operated and offer cheap airfares there. They'd do this until the smaller airline would give up. And when the competitor pulled out, Northwest would raise its airfare and reduce the number of flights on its schedule. Northwest's Ebenhoch says the company is vigorously competitive, but not predatory. He says the suits filed by airlines in the 1990s for such practice didn't go anywhere.
In any case, concerns about predatory practices went away after the September 11 attacks of 2001. Professor Goetz from Univerity of Denver says that's because legacy carriers like Northwest hit financial trouble and didn't have the resources to drive other airlines out of its markets, and the low-cost carriers started thriving.
Low-cost carriers, like Midwest Express, AirTran, and Sun Country, have managed to get a foothold here, but Goetz says the Airports Commission needs to expand the options even more in light of Northwest's financial problems.
"The airlines -- and this particular airline -- may not be there always. So it's always a wise thing to have some back-up plans, and think about other airline service that might be able to be brought in," he says.
Goetz recognizes that's a sensitive issue since Northwest is so closely tied to the history and economy of the Twin Cities.
Airport officials say they believe other low-cost carriers like Southwest, Spirit, and Jet Blue will eventually locate here. They say they've been courting Southwest in particular for more than a decade.