Saturday, March 24, 2018

American vs. Southwest: DFW's airlines disagree on new government regulation

Southwest Airlines and American Airlines have opposing viewpoints in regard to a new way the U.S. Department of Transportation plans on calculating a metric.

Set to take effect Jan. 1, 2019, the DOT will change the way mishandled bags are counted. Every month, the DOT publishes the Air Travel Consumer Report, which details how often an airline was on time to its destination. Another metric it publishes is the Mishandled Baggage Reports, which details how many times passengers' bags were lost, damaged, delayed in getting to the final destination, etc.

Starting next year, the DOT will change the way mishandled bags are counted.

Here's the current way MBR is calculated: Total baggage reports divided by enplaned passengers

And here's what the new formula will look like: Total baggage reports divided by enplaned bags

Southwest likes this change. American does not.

"We don’t oppose monthly operational metrics on Mishandled Baggage Reports," an American spokesperson said in a prepared statement to the Dallas Business Journal. "... We support a consistent industry standard that puts all carriers on a level playing field and give consumers the ability to make a true comparison."

Southwest did not respond to a request for comment.

Each airline wrote letters to the DOT stating their arguments for why the new measure should be enacted or scrapped. Here's what each airline had to say.

Southwest's Case

The Dallas-based airline said the current way of calculating the metric is "outdated," and the new way would be "a far more logical and accurate measure," because it uses the total number of bags to calculate the metric, not passengers.

This new rule change is sure to benefit Southwest, as its Bags Fly Free policy means passengers bring more bags on their flights than their competitors.

"Not every enplaned passenger checks a bag and many passengers check two or more," Robert Kneisley, associate general counsel for the airline, said in a letter to the DOT. "Moreover, as the department knows, the average rate of bags checked per passenger varies significantly by carrier."

And responding to claims by American and United that the measure would cost $10 million to install the necessary technology to better track bags, Southwest said that estimate is six years old and not true. Southwest says it could do the job for less than $3 million at its 600 gates with no material ongoing costs.

American's case

The Fort Worth-based airline penned a letter with United Continental responding to Southwest's claims. American and United do not want to change the way the metric is calculated.

One of the major reasons why American and United oppose the new rule is costs far outweigh the benefits, and nobody proving the rule will in fact be beneficial.

In its joint letter, American extrapolated Southwest's market share to show that the industry as a whole would end up paying $16 million to comply with the new rule.

"In the almost seven years since the department proposed the rule neither government, public interest groups nor any private party has been able to show any quantifiable, or even unquantifiable, public benefits of this rule," the letter to the government said.

"In fact," it continued, "no party has convincingly demonstrated that the government has a legitimate role in a deregulated industry of requiring airlines to report this service metric."

American and United do support one element of the new rule. Each airline favors a breakout of damage done to wheelchairs and scooters used by passengers with disabilities during travel into its own separate statistic.

(Evan Hoopfer - Dallas Business Journal)

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