Orlando-based discount air carrier AirTran Airways, has filed a formal complaint accusing Northwest Airlines of dumping seats to keep it out of the fortress hub in Minneapolis
AirTran planned to launch in June up to four daily flights between Minneapolis and Atlanta, using its new 100-seater Boeing 717s. AirTran has formally complained to the US Justice and Transportation Departments that Northwest intentionally "dumped" a large number of new seats - an additional 301 to a total of 1,053 - to prevent the low-fares carrier from entering the market. "Northwest Airlines added more seats between Atlanta and Minneapolis than AirTran could introduce in the market," says a company position paper.
"This over-aggressive capacity increase eliminates the possibility for AirTran to enter the market profitably." AirTran chief executive Joe Leonard, a former Northwest executive, says that if the government agencies take no action, "Northwest and others will continue to have their way".
This complaint follows a lawsuit filed by Spirit Airlines, another low-fares carrier based in Florida, alleging that Northwest forced it to abandon flights from Detroit to Boston and Philadelphia by cutting ticket prices and flooding those routes with new flights. Spirit's complaint, filed in the Federal Court in Detroit, accuses Northwest of willfully losing money in the short term with predatory pricing to drive out competition and then recover its losses by raising prices.
Northwest responds that it was competing fairly in the marketplace.
The airline says it had filed for expanded services to Atlanta in mid-February, before the 8 March filing by AirTran. "These facts clearly suggest that AirTran is using the Northwest summer 2000 schedule as a smokescreen to justify its otherwise unexplainable decision to back out of its commitment to the Metropolitan Airports Commission to commence service," says a Northwest statement.
"AirTran is free to enter and leave the marketplace as it sees fit," adds Richard Anderson, executive vice-president for Northwest.
But AirTran seems determined to fight its cause. "Unlike Northwest, AirTran does not have the ability to cross-subsidise competitive market losses with profits derived in large monopoly markets," AirTran states.
"The consumer benefits of fair and reasonable low fares competition will never be fully achieved if incumbents can act in this manner."
Source: Airline Business
