Let me suggest five guiding principles.
First, do no harm. By that I mean don’t undercut or hobble the democratization of air travel ushered in by the Airline Deregulation Act of 1978. Even though adjusting to real competition has been difficult for most legacy carriers (and some new entrants), some airline business models are succeeding, even in today’s recession. Passengers overwhelmingly prefer low fares to greater amenities, and we should respect their judgment.
Second, implement further reforms of the air traffic control system, as recommended by both the Baliles and Mineta Commissions. Implementing the much-needed NextGen paradigm shift will remain high-risk, if the Air Traffic Organization remains embedded in a traditional federal bureaucracy subject to continual micromanagement and unable to tap the capital markets for large-scale investments. The Nav Canada example of user-board governance and a bondable user-charge funding system is the best model for what the ATO should become.
Third, strengthen FAA safety regulation, in two ways. Get serious about applying a single safety standard to all scheduled air service. And put FAA safety regulation at arm’s length from the provision of air traffic control services, by separating the ATO from the FAA. The latter is critically important to ensure public confidence in the major changes (e.g., automation, reduced separation standards) inherent in implementing NextGen.
Fourth, get serious about “over-scheduling” at major congested airports, by implementing runway congestion pricing at such airports. Yes, NextGen and more concrete have roles to play, but ultimately when peak-period demand still far exceeds capacity, that limited capacity must be allocated somehow. The fairest way to do that is via market pricing.
Fifth, let’s implement truly open skies, by dropping the anachronistic protectionism that still treats airlines as different from other competitive industries. In other words, remove the restrictions on foreign ownership, so as to permit the emergence of truly global carriers with access to global capital markets. And yes, that will ultimately mean removing restrictions on cabotage.