Less than a month ago, it seemed clear that privatization was the wave of the future for the United States Air Traffic Control System (“ATC System”). On February 19, 2016, the United States House of Representatives Transportation and Infrastructure Committee approved the Aviation Innovation, Reform and Reauthorization Act (“H.R. 4441” or “FAA Reauthorization Act”), the centerpiece of which was the establishment of an independent, nonprofit, private corporation to modernize the U.S. ATC System and provide ongoing ATC services. The benefits of such “privatization” were seen to include less expense, less backlog in the implementation of air traffic control revisions, in essence, greater efficiency in the development, implementation, and long-term operation of the ATC System. Central questions still remain, however, concerning the synergy of a private corporation’s management of the ATC System with the overarching statutory regime by which it is currently governed.
A recent analysis of the relationship of airline mergers to airline service and pricing reports the unsurprising result that, since the mergers of Southwest Airlines and AirTran, United Airlines and Continental Airlines, and Delta Airlines and Northwest Airlines, airline capacity measured by the number of available seats, has gone down across the board at the top 100 airports in the 48 contiguous states since 2005 while prices have increased equally broadly. For example, at the largest airport in the United States, Atlanta-Hartsfield, the number of seats has fallen by 12.3%, while the average fare price has increased by 3.7%. Similarly, at Boston Logan, the number of seats has dropped by 10%, while the fares have increased at an average of 2.2%. Those changes, moreover, are not limited to the top 100 airports. At secondary airports in metropolitan areas with multiple airports, the same trend persists. At Oakland Airport in the San Francisco Bay area, fares have increased 6%. And those ominous trends appear to continue.
In response to the proposal of a merger between American Airlines and U.S. Airways, the Justice Department promptly brought suit on the grounds of, among other things, restraint of trade and violation of the Sherman Antitrust Act. Last week, the Justice Department settled with the airlines on the promise by the airlines to surrender gates and slots at major airports.