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Could fixing late flights raise fares?

Northwest Airlines CEO Douglas Steenland on Monday said he favors an industry agreement to trim schedules at the nation’s most congested airports, but he warned that reducing flight delays that way would result in higher airfares.

In an interview, Steenland said an agreement among airlines to reduce flights in congested markets such as New York City, the Northeast and Chicago wouldn’t be popular with everyone. Reduced capacity could make seats to and from those cities harder to come by and more expensive.

But, he said, “If we do nothing, the problem (with delays) will simply continue to compound.”

Steenland, who has led the Eagan, Minn.-based carrier since 2004, reacted to a warning last week by departing Federal Aviation Administrator Marion Blakey. In her final speech as a top regulator, Blakey urged airlines to “take a step back on scheduling practices that are at times out of line with reality.”

She warned airline executives that if the industry doesn’t cut back voluntarily, “Don’t be surprised when the government steps in.”

The FAA is concerned about the airlines’ practice of packing more flight at major airports than can be safely handled even under ideal conditions. That practice is at least partly blamed for this year’s unprecedented numbers of flight delays.

The U.S. Bureau of Transportation Statistics reported 1.1 million flight delays in the first seven months of 2007, a record. That means nearly 3 out of every 10 flights through July arrived at least 15 minutes later than scheduled.

Steenland said an agreement to cut schedules at critical times at congested airports would “recognize the reality that some of our airports have reached their capacities.” Steenland sees no relief in the future through airport expansion.

“We’re not likely to see a lot more runway space or terminal space at lot of these airports, so congestion is going to be a long-term issue for this country,” he said.

For airlines to significantly roll back their schedules in some of the most popular markets, they need a grant of antitrust immunity to meet and agree on how many flights each would cut. That’s because airlines would be loath to unilaterally reduce service in key markets and risk losing critical market share to competitors who don’t do likewise. Airlines have been given antitrust immunity to discuss matters several times in the past. But none of the parties that would involve, including the FAA, have asked for an immunity grant.

Steenland says corporate jet operators also contribute to the congestion problem, and must be part of any solution.

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