Another problem not encountered with the British experience is the dominance of
one airline at a given airport. While British Airways has the largest market
share in Great Britain, the airline does not have a majority of the market.
Similarly, British Airways has not historically had as much leverage at British
airports as U.S. airlines at U.S. airports in determining which gates it is
assigned and other matters of airport management. Because the use of hubs is not
as common abroad as in the U.S., airlines have not needed the careful gate
assignments U.S. carriers enjoy at the airports they dominate.
[39]
In
an unrestricted environment, privatization of Metro could result in more serious
problems if the dominant airline is given too much leverage in its relationship
with the airport. Under such a scenario, it might be conceivable for Northwest
(with 57% of Metro's market) to gain a competitive advantage by:
a) Acquiring an equity position in the airport giving it a role in airport decision-making as an owner,
b) Entering into special agreements with the airport to enhance its dominance, or
c) Using its market share to leverage special conditions.
A
provision of privatization of BAA prohibited any entity from acquiring more than
15% of the outstanding shares of BAA. Thus, British Airways (or any other
airline) could not acquire more than 15% ownership in BAA. (fn fact, British
Airways owns none of BAAs outstanding shares.)
[40]
BAA
has been very careful to avoid any special treatment of British Airways.
Representatives of BAA and British Airways independently observed that market
demand for landing rights and space at the busiest airports in Great Britain
make any special arrangements highly unlikely. Demand is so great that were
British Airways to reduce utilization anywhere, other airlines would happily
take up the available capacity.
A
similar situation exists at Metro. Detroit is such a popular location for an
airline hub that were Northwest to relocate elsewhere, another airline would
certainly enjoy the benefits of the Detroit area's location and air travel
demand.
In
the current negotiations for the expansion of Metro, Northwest – the dominant
airline – has a strong interest in expansion to increase its hub operations.
Other airlines using Metro have no such interest. In fact, it is in the interest
of other airlines to stifle the growth of Metro to keep Northwest from expanding
capacity. Theoretically, non-dominant airlines could disrupt competition by
vetoing any expansion not in their own best interest.
In a
privatized system, contractual controls which are not in the best interest of
the community might be avoided. The airport could expand without receiving
approval of 85% of the airlines (as the Basic Agreement requires).
