BTC published position

Washington Times

October 10, 2007

Now boarding

In response to the Commentary article regarding a new U.S.-to-China route authority, and the advocacy for a Washington-to-Beijing award, the Business Travel Coalition would like to point out why the U.S. Department of Transportation should not choose Washington ("D.C. to Beijing air bridge?").

The article's focus is on the route and not United Airlines, the airline applicant, which has the dominant U.S.-to-China market position. Increased competition is paramount in achieving lower fares for business travelers and incentives for improved airline customer service. It should be the priority now for the DOT.

United is the foremost carrier among U.S. airlines that fly between the United States and Beijing, enplaning some 35 percent of all passengers carried by U.S. airlines. United's U.S.-to-Beijing market share is an even larger 70 percent when code-share partner Air China is taken into account. This market dominance took decades to build and should not be reinforced with new authorities.

Since United was first awarded China route authorities in 1986, it has grown its market presence to 28 weekly frequencies. This 20-year head start on new entrants Continental and American allowed United to build a well-fortified position serving Beijing and Shanghai from its Chicago and San Francisco hubs. Awarding United more frequencies would increase market concentration and contravene the DOT's own competition guidelines, without sufficient offsetting benefits.

The assertion that the Washington metro area is the largest metropolitan area in the United States without non-stop service to China is simply wrong. According to the U.S. Census Bureau, its statistics would rank the Washington metro area eighth in size with respect to no non-stop service to China and Dallas/Fort Worth fourth. In important contradistinction to the Washington metro area, China is Dallas-Fort Worth's largest trading partner, with total trade valued at more than $13.6 billion in 2005.

To DOT's great credit, it has over the years established an impressive pro-competition track record in decisions involving both the domestic and international marketplace. For instance, the department recently issued an order placing a priority on new entrants receiving any new air side capacity at Chicago O'Hare in order to inject competition into a market dominated by United and American. The same fundamental principle applies in the China route case.

Increasing airline competition in a market dominated by one or two players should remain DOT's highest priority. In doing so, consumers will be the winners receiving lower fares, better service and more options. In contrast, awarding more China frequencies to United will only serve to further entrench the dominant player in the market and reduce competition. In such an inconceivable
outcome, consumers and the businesses that coalition represents would be the losers.

My organization urges DOT to see through United's expensive "capital-to-capital" public relations campaign and focus on what both United and consumers need most in the US-to-China air service market: more competition.
    
KEVIN P. MITCHELL
Chairman
Business Travel Coalition
Radnor, Pa.