Predatory Practices & Monopolization in the Airline Industry: A Case Study of Minneapolis/St. Paul

Transportation Law Journal, Vol. 29, No. 129, Spring 2002

59 Pages Posted: 19 May 2011

Date Written: 2002

Abstract

The monopolization of air transportation is among the most pernicious of commercial events, for the price of air transport impacts the cost of doing business in entire geographic regions. At cities like Minneapolis and St. Paul, Detroit and Memphis, the suppression of competition results in a regressive wealth transfer from consumers to producers to the tune of hundreds of millions of dollars per year. It is, in effect, a hidden tax on all who must pass through the airport. Because aviation is part of the infrastructure upon which all other businesses in a community depend, excessively high air fares dampen economic activity in whole geographic regions.

For more than a decade, Northwest Airlines has been among the most aggressive carriers in responding to new entrants that dare to inaugurate service on its monopoly spokes radiating from its Fortress Hubs at Minneapolis/St. Paul, Detroit, and Memphis. Numerous studies have revealed that where there are few or no low-fare carriers disciplining an incumbent monopolist, hub premiums are high and continue to increase over time. Conversely, the greater the presence of a low-fare carrier at the hub, the lower the hub premium.

Airports are public resources, paid for by taxpayers. To allow their monopolization, and the consumer exploitation which results from this, is antithetical to the public interest.

Keywords: predatory practices, air transport, airline industry, monopolization of air transportation, suppression of competition, hub premium, market power, airport monopolization

Suggested Citation

Dempsey, Paul Stephen, Predatory Practices & Monopolization in the Airline Industry: A Case Study of Minneapolis/St. Paul (2002). Transportation Law Journal, Vol. 29, No. 129, Spring 2002, Available at SSRN: https://ssrn.com/abstract=1845823

Paul Stephen Dempsey (Contact Author)

McGill University - Faculty of Law ( email )

3690 Peel Street
Montreal, Quebec H3AIW9
Canada

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