Wednesday, December 29, 2010

Airline Deregulation – 1978

I flew heavily on business during the first half of the 1970s and the last half of the 1980s, both before and after Deregulation.  Schedules were much more reliable before Deregulation.  Passenger screening consisted of nothing until late 1972 when metal detectors were installed throughout the country at the direction of the FAA.  Airlines were made responsible for the screening.

Airlines were subject to government regulation from their very earliest days, 1920s to 1930s, the reasoning being that they served a function much like a public utility and that the government had paid a lion’s share of aircraft development to that point in time.  Utilities have traditionally been seen as services necessary to the smooth conduct of commerce; transportation, mail, electricity, water, sewer, police, fire, communications. 

Free market supporters, being what they are, always see functions that produce large amounts of cash flow as potentially profitable enterprises, if only they were free of government intervention and open to capitalists to work their magic.  There follows an ongoing dance between ever increasingly inefficient, bumbling government regulators, pliable politicians, and ambitions capitalists to determine if government regulation serves its initial purpose or not. 

In 1978, after nearly 50-years of airline regulation by the CAB, the government under the auspices of Messer’s Carter and Kahn, effected Deregulation amidst great fanfare.  Within a few years, during the 1980s, we lost a number of old line carriers as they merged or liquidated, leaving us with the few majors we have today.  Low cost carriers emerged and disappeared.

Competition, such as it was in a regulated environment, tended to focus on the quality of cabin service (meals & comfort) and reliable schedules.  Prices were uniform and expensive.  After Deregulation, comfort disappeared, as did meals and reliable schedules.  On the other hand, owing to the true capitalist nature, prices could range from too cheap to outrageously expensive depending on who had the upper hand in the transaction.

In a regulated environment, airlines tended to be assigned in pairs to specific routes in order to ensure service to underserved destinations and to provide a kind of measured seat availability.  Their departure and arrival times were also regulated in order to ensure smooth traffic flow.  However, it could be a challenge for a traveler to piece together a sensible schedule since it often required changing carriers on a multi-leg journey.

After Deregulation, carriers switched to a hub and spoke arrangement, much like the package carriers had been using for years.  This permitted an airline to capture a passenger for the entire journey as it made switching airlines difficult, expensive, and irrelevant (it also rendered the DFW “People Mover” even more useless than it already was).  Unfortunately, it made choosing a competently-run airline more important than ever which was difficult to do for the occasional or unsophisticated traveler.

So, here we are over 30-years down the road and airline travel, despite propaganda to the contrary, is not as comfortable and predictable as it was.  Ticket prices are lower and I suppose that’s something; but, I couldn’t imagine being trapped in a plane on a tarmac for 10-12 hours for any reason whatsoever—I don’t care what excuses are given or by whom.  The risk of that circumstance alone is enough, in my opinion, to constitute a significant decline in airline service over the past 30-years.  And the faces I would attach to that accomplishment are those of Messers Carter and Kahn, both of them Democratics. 

No comments: