*This was something I wrote for an Economics Blog. Thought I’d just keep this blog alive by sharing it here. Feel free to trash/comment on anything I say.
About this time a month ago, I was making my way to Ann Arbor for school all the way from an Island in another part of the world. I vividly remember taking a cab from JFK to LaGuardia (LGA) to catch the 4pm flight to Detroit and was somehow not looking forward to it at all. Having transited through LGA a couple of times before, I wasn’t entirely sure if I’d reach Detroit at the promised 6pm arrival time, simply because of the possible delays I’d experience at LGA.
As one of the busiest airports in terms of passenger traffic, LGA is the biggest single aviation market in the world. With “just two intersecting runways and overcrowded terminals, taxiways and gates.” (WSJ) LGA’s efforts to ease flight delays and regulate air traffic for the last decade have yielded no effective long-term solutions. It is still facing the same problems it faced since before 911.
Delta Airlines Inc. hopes to capitalize on this by making it more attractive for passengers to travel. According to the WSJ, “After acquiring a large block of landing slots and gates from US Airways Group Inc.” Delta has “added more than 100 additional flights a day at La Guardia” (WSJ). The basic idea is that, with careful planning and scheduling of flights within the ‘Delta Hub’, expanding its terminals and its expertise in handling overcrowded hubs, Delta hopes to become the first choice of travel in LGA by winning over the confidence of people in it ability to manage flights efficiently. And with flights spread out in JFK as well, this would ultimately enable Delta to claim a greater portion of New York’s aviation market share.
Delta therefore becomes the more attractive flying option for connecting passengers and passengers flying out of New York because of its management efficiency. There would be decreased waiting times and delays. Delta is also able to profit from this by ‘thinking at the margin’. It is able to fill more empty seats on planes with connecting passengers and sell tickets to them and standby travelers at a lower price thus profiting marginally from defraying the marginal costs of perhaps what the passenger consumes on the plane for instance.
Of course, it can be easily foreseen that Delta’s rise will be matched by competition from its contemporaries. Other airlines operating in LGA would be collectively seen as second choice after Delta assuming that ticket prices remain roughly the same. This pressures airlines to end up increasing the frequency of their flights to cater to more consumers or lowering their ticket prices. Lowering ticket prices might increase the demand for these second choice airlines, but this does nothing to solve congestion and delays. Passengers would eventually realize that they’re better off sticking to Delta by paying just a little more on their tickets. Also, airlines would not be able to increase the frequency of their flights easily without paying more.
This new development could go either way. It could be beneficial or it could just perpetuate the problem. At the end of the day, congestion could either worsen with airlines paying more to increase the frequency of their flights to compete with Delta or Delta could eventually become the airline of choice with its new acquisitions from US Airways Inc. Sometime in 2000, Congress lifted restrictions on the system by allowing an unlimited number of new flights to underserved markets like Buffalo and Savannah, GA. It could be assumed that at this point, it would’ve cost less to increase the number of flights to these locations. Because of this, airlines proposed adding 600 new flights a day. However, according to a NEWSDAY article published on the 9th of April 2001, “About 300 new flights were added, and the resulting jam pushed LaGuardia past Chicago’s O’Hare as the nation’s worst airport for delays.” If this were to happen today, once again the Port Authority would have to intervene when the congestion situation gets worse and this would be detrimental to the reputation of the airport and the airlines concerned.
Delta’s plans of building a hub and increase the number of flights could either work or fail. If it fails, like the WSJ says, it could be ‘expensive and embarrassing.’ Whatever the case, it is a step in the positive direction to help relieve LaGuardia of its congestion woes. Only time will tell whether or not it’ll work.
Brief Principles of Macroeconomics 6th Edition – N. George Mankiw.