Government Regulation of Charter Airlines

We'd be the first to admit that the U.S. airline industry has had its share of problems lately, but we will also be the first to remind the government that any relief for airlines has to be fashioned in a way that does no harm to the rest of the travel industry.

Unfortunately, a group of charter airlines has laid a proposal at the doorstep of the Transportation Department that would do great harm to what has been, until now, a deregulated market for charters.

If you're a tour operator, meeting planner, incentive house or travel retailer, you can organize a charter flight from the U.S. to a foreign destination using virtually any airline that will agree to negotiate a price.

Since deregulation, the U.S. and many of its trading partners have permitted each other's airlines to operate so-called "fifth freedom" charters, meaning they don't go to the carrier's homeland. This allows a tour operator to entertain a bid from, say, a European airline for a charter between the U.S. and the Caribbean. This open competition is one reason why charters have remained competitive.

But the National Air Carrier Association, which represents some U.S. charter airlines, claims its members are losing too much business to foreign carriers that fly charters from the U.S. to third countries.

The DOT only allows such charters if the carrier's home government offers reciprocal opportunities to U.S. carriers, but NACA says this isn't enough. It says some of these carriers are from small countries whose outbound travel markets can't offer "equivalent" opportunities for U.S. airlines.

In such cases, NACA says, the DOT should give U.S. carriers a right of first refusal -- in effect, the right to step in when a tour operator and a foreign airline have a contract, and to take over that contract, "price notwithstanding."

That's the proposal, and we are hereby hooting it down. It was born of the same protectionist instincts that prevailed in this business before deregulation, when the charter industry's biggest problem was the "solution" it now seeks: government interference in the marketplace.