Out of Control Policy Blog

Free the skies

Daniel Drezner points to this New York Times piece that looks at America's experience with airline deregulation.

Some labor unions are actually pushing for reregulation (Or is it "un-de-regulation"? ... No that sounds like something that should concern Victoria's Secret. Rim shot?)

Anyhow, here's what one union rep has to say:

    "Are we willing to accept the results of a free marketplace, or do we think the role of commercial aviation is such a part of our economy that we have to have government influence?"

Of course, there's all sorts of government influence in air travel. Talking about airline deregulation can be misleading because it gives the impression that air travel has been completely deregulated.

Yes, fares and routes have been deregulated, but air traffic control, security, and airports themselves are still dominated by government control--at least in the US:

    In sharp contrast with the U.S. situation, around the world airport privatization keeps expanding. In 2003 Asia paved the way to privatize some of its largest airports, including Hong Kong, Tokyo, Bangkok, and several airports in India ... Privatization continues to spread across more of Europe. The Dutch cabinet approved the long-awaited privatization of Schiphol Group, which owns and operates Amsterdam Schipol Airport and two others in The Netherlands, as well as having part interests in several airports overseas ... And the German government in April 2004 announced plans to sell shares in Frankfurt (already largely privatized), Cologne-Bonn, and Munich airports.

Back to the union rep who's pushing rereg:

    "It's a conversation I'd like to have before everyone wakes up and asks, 'What the hell happened?' "

What the hell happened? This is what happened:

    Since federal restrictions on routes and fares were removed, consumers have been saving $20 billion a year on air fares, when adjusted for inflation, according to Brookings. Fares have dropped by more than 30 percent, on average, and as much as 70 percent when tickets are bought in advance, the group concluded.

    At the same time, airlines have vastly expanded their networks, bringing air travel - a relatively infrequent experience [several decades ago] - to people all over the country. For example, American, the biggest airline, flew to just 50 cities in 1975; it now serves more than three times that number.

For more on this go here.

(Oh, and sorry about the bad joke.)

Ted Balaker is Producer


« Climate Change Redux | Main | Privatization? No. Grocery bag tax?… »




Out of Control Policy Archives