The High Cost of Competition

Anyone who has sat in an airport watching mostly empty planes from competing lines take off for the same place at almost the same time may have wondered whether all those trips were necessary. Alone among nations, the U.S. allows a flock of its airlines to compete on routes that can barely pay off for one. Probably the worst case of overcompetition is the Los Angeles-Honolulu route, covered by eight lines.

Last week Secor Browne, chairman of the Civil Aeronautics Board, sugested that the airlines take the lead in reducing excess competition. In a major policy speech delivered at a meeting of local airline officers in Anchorage, Alaska, he asked: "Is it profitable for you to serve all existing points on your routes where you have competition? Or are you serving those points merely because another carrier is there and you would rather have a share of the market and lose money instead of seeing him have it alone? In plain English, are there points in your route where two carriers is one too many, and what do you propose to do about it?"

Some top airmen contend that they could trim fares if Browne's CAB did not overburden them with enforced competition. As Browne conceded, "there has been criticism from some that the CAB is still grinding out route awards every Friday afternoon." But most of those are made on the basis of cases started long ago, when the economy--and traffic--was riding high. Others have been made because of congressional or White House intervention over the objections of the CAB. A classic case was the 1956 award of a New York--Miami route to Northeast Airlines, pushed through first by the Eisenhower Administration and later granted on a permanent basis under pressure from President Kennedy and House Speaker John McCormack. What previously was a profitable route for two airlines became unprofitable for three, and the weakest, Northeast, is in the process of being taken over by Northwest Orient.

Clearance for Change. Browne, a former professor who built his reputation as a transportation expert at M.I.T., in effect invited the airlines to change their course, dropping unprofitable routes served by another carrier and cutting back on too-frequent flights. One major airline is planning to do just that. Using computers, it has analyzed its route structure and juggled schedules that were planned simply to top the competition. A number of the routes that the line flew during the piston-plane days will be picked up by smaller local carriers. Still other lines have indicated that they are willing to do the same now that Browne has given them takeoff clearance. There remains the problem of satisfying the Justice Department's eager trustbusters. They recently protested an agreement by three big carriers to cut schedules and reduce capacity on the New York-Los Angeles run.

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