The Utah Air Travel Commission has voted to form a task force that will deal exclusively with the controversy over the rise in air fares for Utahns, a task whose complexity soared this week with announcement of new fare studies by the airline industry and the federal government.
Pressured by air travelers complaining of soaring ticket costs since Delta Air Lines established its "hub and spoke" operation at Salt Lake City International Airport two years ago, the commission allocated $15,000 last December for consultants Kurth & Associates of Washington, D.C., to determine if Delta was taking advantage of its dominant presence in the local market."Not at all," was the bottom line of the Kurth report, released in March. The report contended that Salt Lake City was not being discriminated against by Delta or any other airline. On the contrary, the report said Delta's Salt Lake hub (a hub means an airline routes a larger share of its flights through a single airport) had created a level of air service locally that was much higher than it otherwise would be.
While the Kurth report didn't silence Delta's critics, it gave the commission solid ammunition to answer their contention that Delta was using its "monopoly" (Kurth denies Delta has any such thing) to put the squeeze on local air travelers.
On Tuesday, the airline industry's Air Transport Association (ATA) released a new 60-airport study that seemed to support the Kurth report. The ATA study said competition is up and average fares at two-thirds of the nation's hub airports have decreased in the past four years with average fares at 30 hub airports only 1.5 percent higher than non-hubs.
But 24 hours later, the government's General Accounting Office (GAO) released its own study of 15 major hub airports that said air fares average 27 percent more per passenger mile at 15 major hubs than fares at non-hubs and that competition has decreased on many routes.
Who's right? There's no way to tell because the Kurth, ATA and GAO studies all used different statistics and all put their own spin on the data. All of them agree, however, that fares are lower overall since airlines were deregulated a decade ago and that hubs create efficiencies through consolidation of maintenance and other airline operations.
While the ATA report seems to support Kurth's findings for hub operations overall, an examination of the ATA study by the Deseret News Washington Bureau shows that, counter to the national trend, fares at Salt Lake City were sharply higher than in most of the rest of the nation, running 121.4 percent of average.
Average fares to Salt Lake City were 9.8 percent higher than "expected," according to the ATA, second only to Houston, where fares in the third quarter of 1988 were 13 percent higher than the ATA said should be expected.
Fares rose 24.8 percent at Salt Lake City between 1980 and 1988 and 8.6 percent between 1984 and 1988, the study indicated, behind only Dallas, which had been experiencing a fare war in 1980, and Houston.
Of 30 hub airports, the ATA said, the average fare index declined at 11 and increased at 17 between 1980 and 1988.
ATA blamed Salt Lake City's relatively smaller population - 44th among U.S. metropolitan areas - and "high service level" for the high fare structure. ATA said 80.2 percent of flights originating in Salt Lake City were non-stop to their destinations, up from 74.8 percent in 1980, and described the higher fares as a "premium" for "superior service."
The report by the GAO (the investigative arm of Congress) says fares for dominant airlines at 13 of 15 hubs studied were higher than fares for other airlines serving the same airports. The GAO found that after a single airline gained dominance at an airport, the number of destinations served by four or more airlines fell 52 percent while the number served by only one carrier jumped 25 percent.
Do these two reports invalidate the Kurth report? Not at all, said Yan M. Ross, chairman of the Utah Air Travel Commission. "The Kurth report compared us directly to other hubs. These (ATA and GAO) studies include a percentage of non-hub airports."
In any case, Ross said the issue "isn't stuff for headlines" but for a rational, long-term monitoring, something he said the commission's new task force will permanently undertake, beginning with an update, using 1988 data, of the Kurth report.