As long-time readers know, Shanghai Scrap has been, a) offline for almost a month, and b) a rant-free zone for most of its life (ie, a reported blog). But once in a while, really, I can’t help myself. Especially when the topic is Northwest Airlines.
So let’s get right to it.
On December 29, the AP reported the following:
The subsidiary of Atlanta-based Delta Air Lines Inc. said in a filing earlier this month with the Department of Transportation that it was seeking to delay proposed daily Seattle-Beijing service by a year from March 2009 to March 2010 and delay startup of Detroit-Shanghai nonstop service by more than two months from March 25, 2009, to June 3, 2009.
Now, this might sound eminently reasonable in light of the current economic crisis. After all, the US airlines – including Northwest – have been cutting back on domestic US routes for months. Why wouldn’t they cut back on Asia routes, too?
But sharp observers might notice something wrong with this picture. As it happens, US airlines don’t need DOT permission to cut back on domestic US routes. So why on Earth should they have to ask for permission to cut back on US-China routes?
The problem is that China and the US strictly regulate the number of flights between the two countries. In mid-2007, for example, there were only ten daily flights between the US and Shanghai, Beijing, and Guangzhou. Then, in May of that year, the US and China agreed to double the number of flights by 2012. Almost immediately, US carriers – including Northwest – began to lobby the US Department of Transportation for the right to fly these rare, and presumably lucarative routes. Northwest appeared to be more aggressive than most and, following past practices, posted a notice on its website asking its customers to support their bid by signing an online petition in favor of a direct Detroit-Shanghai route. My recollection is a bit vague, here, but I think that they also sent out emails to Asia fliers (like me) asking the same favor (on second thought … those emails might date back to a prior bid for China service).
In any case, Northwest won the right to the Detroit-Shanghai route, and a Seattle-Beijing route over other airlines offering different routes. And supposedly, the interests of the US and Chinese flying public were served: more direct routes, between more cities, for less money. Except that Northwest has decided to take its government-granted routes – the result of high-level negotiations between the US and Chinese governments – and put them into cold storage and, in the process, reducing competition, consumer choice and convenience and – probably – raising prices. It may well be the case that Northwest can’t afford to fly the new routes at the moment. But it might also be the case that the new routes would bring unwanted competition to Northwest’s already established routes between Detroit and Tokyo, and Seattle and Tokyo (with both connecting to Tokyo-Shanghai flights), thus driving down prices (to the benefit of beleaguered US consumers).
Of course, nobody – including the Department of Transportation – should be able to force Northwest to fly these routes. But neither should Northwest be able to delay the public from benefiting them just because the bozos in management can’t figure out how to fly them profitably.
So, humbly, Shanghai Scrap offers its first public policy prescription in many many a moon:
The US Department of Transportation should reply to Northwest’s request for a delay in offering its new China services by ordering the airline to begin flying the awarded routes (again, awarded over other carriers and other routes) on the promised day of service (March 25, 2009, for the Detroit-Shanghai route). If the route is not flown on the promised date, Northwest will immediately forfeit it to another competitive bid – from which it will be excluded – by the Department of Transportation. If no other carriers bid for the routes, Northwest maintains them for another sixty days, during which it can begin flying the route or forfeit it after another 60 day period ending in a new competitive bid.
This solves two problems. First, it prevents private airlines from anti-competitive behavior that doesn’t serve the interest of air consumers. And second, it gives those airlines the benefit of the doubt on claims that their newly awarded China routes can’t be flown competitively. If that’s true, then, presumably, none of the other US carriers would bid for Northwest’s Detroit-Shanghai route it it were suddenly forfeited.
And ten bucks says that Northwest would keep to its word and start flying those routes as scheduled.
[Addendum: Yes, I realize that the other US carriers with newly awarded China routes are playing the same sorts of games. But Northwest is the airline that has done it most recently. And it is also the only airline that has a category on Shanghai Scrap. Thus, it – and not the others – is the recipient of Shanghai Scrap’s ongoing disdain.]
[Addendum 2: And yes, I realize that Northwest is now owned by Delta, though operating as an independent company underneath it. A vassal, if you will.]