United Successfully Uses Government to Halt Competition in DC

With Delta’s Richard Anderson retiring, we lose the most cronyist airline CEO in the country, who seeks to use government to gain every possible advantage over competitors and sees taxpayers as his own bank account.

With his team simply being elevated, it’s possible that Delta stays this course. But there’s also an opening. And United may be looking to fill it.

Via Live and Let’s Fly, United successfully killed an effort to expand the ‘perimeter rule’ at Washington’s National airport from 1250 miles to 1475 miles. Because they don’t want competition to be allowed against their flights at Washington Dulles.

As I explained in 2003,

The originally stated purpose of the 1250 mile limit, or “perimeter rule,” was to allow Washington-Dulles airport to build itself up as a base for long-haul flights. Ironically, by limiting the distance of flights at the close-in airport, National got more short flights and Dulles did not. So there wasn’t enough feeder traffic for long-haul flights, and the development of Dulles as a hub was hampered for a decade. The perimeter rule forced Dulles to more or less rely of the DC market for its flights instead of supplementing that traffic with connecting traffic.

The perimeter rule was backward, it had the opposite effect from what was intended for a long time. But United has the substantial presence there, and offering longer flights from National would compete against their flights.

The expansion of flights from Washington National was advocated by Congressman Blake Farenthold, a former regular poster on Flyertalk who sought the possibility of direct service to Corpus Christi which he represents (and which is 1404 miles from National airport).

United takes credit for killing the move, acknowledging their motivations, in an employee newsletter:

United’s Congressional Affairs team worked with Chairman Bill Shuster (R-PA) and several Republicans and Democrats on the House Transportation Committee to oppose the amendment.

…The current perimeter rule ensures many smaller markets in the eastern U.S. continue to have non-stop air service to the nation’s capital and that IAD remains the region’s international hub airport. Without it, airlines at DCA would have a strong economic incentive to substitute more profitable long-haul service to large West Coast markets, while drawing traffic away from United’s Dulles hub.

United spokesman Charles Hobart declined to provide additional explanation.

It’s absolutely true that Washington National, with a fixed number of allowable flights, has more short haul flights than it otherwise would. (Indeed, it was small communities which lost flights when slots were taken away from American Airlines as part of its acquisition by US Airways.)

It’s not obviously true that those markets would lose service altogether. In fact, there would be more of a mix of short and long distance flights at Washington National, and less short distance competition at Dulles making such flights more profitable to offer there.

However United gives away its motivation in seeking to maintain government protection for Washington Dulles: it doesn’t want competition which could draw away traffic on its longer distance flights.

Congressman Shuster (R-Conquistadores del Cielo) seems to want to give the airlines whatever they wish. Consumer choices, convenience, and competition-lowering fares don’t appear to factor.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Crony Capitalism & corporate welfare at it’s finest. CONgressman Shuster is just another poster-boy for term limits.

  2. I’m shocked United hasn’t invoked their “It’s the heavily subsidized mid-East airlines’ fault” argument.

  3. The obvious problem now is that UA has cut back it flights in and out of Dulles by more than 11%, with more to come. Then what?

  4. I am one of the unlucky ones who counts IAD as my home airport. Between United´s shenanigans and the Washington Airport Authority corruption and mismanagement, it´s amazing there are any flights left at Dulles. At least we get to enjoy poor service and high prices.

    It´s amazing that people still wonder why political outsiders are the leading contenders for President. People are fed up with this crap!!

  5. And people think I’m crazy for staying loyal to Delta after moving to DC.

    United is a complete and utter disaster at IAD. I actually enjoy flying out of Dulles…on any airline but UA.

    They have squatted on that airport for years now, refuse to put any money into terminal renovations, and expect people to pay through the nose for flights that are often delayed for hours.

    I wish that AA could find a way to move their operation from DCA to IAD to take on United. It would be tough fight, but is there any market with real competition where people chose to fly UA over other options? United has been slowly but noticeably reducing flights at IAD for several years now. Perhaps they see the writing on the wall? That fact that the federal government now has an indirect contract with Emirates for IAD-DXB flights says a lot IMO.

  6. Ah the perfect excuse for a libertarian rant. Very predictable.
    So the solution is non-stops to Corpus Christi from DCA and speeding up the closure of the United IAD hub?
    Just ask the people of Cleveland (many of whom I’m sure didn’t care for United/Continental and its poor service and high prices) what life after dehubbing is like…. well maybe they prefer Frontier to United now? I doubt it …. Sure a few folks might come in and cherry pick a few key routes if United shuts its IAD hub but nobody in recent history has planted a hub in a city that another airline has shuttered.

  7. Tom is correct. Further weakening of the perimeter rule at DCA could lead to the closure of the UA IAD hub. The reason UA’s hub there is so lackluster IS DCA: “everybody” wants to fly to DCA, and nobody wants to fly to IAD.

    I’m skeptical that closing the UA hub at IAD would be good for DC flyers.

  8. @iahphx IAD hub was on the chopping block during bankruptcy, it’s always been marginal, you seem to be a protectionist on nearly every issue so why not ban DCA flying entirely on routes UA operates? 😛

  9. @Gary Leff — it’s not “protectionist” to want IAD to survive as a hub. What is the benefit “to the people” of extending the perimeter rule at DCA? I presume it would be more longer haul flying. But not MORE flying — some shorter routes will be cut, likely to smaller cities. Those routes are unlikely to transfer to IAD — especially if extending the perimeter results in that hub being closed!

    So tell us what’s so good about extending the DCA perimeter? I don’t see any winners.

    I will say that extending the perimeter at DCA is a billion times more logical than your position on the Middle East airlines, where you don’t care (or turn a blind eye toward) the tens of billions in subsidies they’re receiving and the horrific effect this has on their competitors who have to actually run their businesses to make a profit. Perimeter rules are debatable; debating the propriety of multi-billion dollar subsidies is silly.

  10. Well, iahphx, I live 3.5 miles from DCA, which I think is a fantastic airport. IAD is practically in West Virginia. I also happen to be LT Plat on AA. Broadening the perimeter at DCA would be fantastic for at least me.

    From my selfish perspective, I’d like to see IAD be more attractive to OW carriers. Were UA to abandon IAD any more, Iberia might return. Air Berlin and CX might make a play. Even LAN is starting a LIM nonstop. And UA retrenchment might encourage AA to up its service from IAD to its hubs – they introduced MIA a few years ago, but that is spotty; as are DFW and CLT, LAX service is on dumpy planes; nothing to its ORD or PHL hubs and despite UA’s abandonment, nothing to JFK.

    Truly, if AA might try to develop some strategic O/D traffic, they could be the new cowboy in the fantastic upper middle class DC market. But they still take a whiff.

  11. @jfhscott — Your belief that IAD “is in West Virginia” is THE problem. Airports that nobody wants to fly to tend to struggle. That’s UA’s problem at IAD in a nutshell. The fact that it’s not an efficient facility doesn’t help, either.

    When the boondoggle Metro extension to IAD is ultimately completed, that should help that airport a bit. But it’s always going to be Washington’s Narita, and Reagan National will be Haneda. You can’t change geography. But as long as our nation continues to transfer wealth to Washington — and I see no real signs that federal gov’t spending is going to decrease –more money in DC will guarantee a future for IAD.

  12. After years of supposedly “following” the commentary once again I fail to understand the logical analyses of some of our brethren.

    You’re on the wrong side of the ECON 202 chart. Oh and Reagan is much nicer than IAD but since nobody pays me to act like a complete fraud, I usually don’t have to deal with either one of them.

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