Does Congress Intend To Re-Regulate Airlines?
March 31, 1999
Various bills have been introduced in Congress to give the federal government greater authority over passenger airlines. Backers of the legislation allege the airlines are responsible for flight delays, high prices for business travelers, reduced service to small cities and tactics designed to reduce competition.
Airline deregulation, which began two decades ago, has been a huge success, economists agree. Would this attempt to re- regulate, if successful, destroy the gains which have been made? And could the government solve whatever problems there may be?
- In 1997, inflation-adjusted fares were 42 percent less than they were before deregulation took effect in 1978, according to Northeastern University economist Steven Morrison.
- Average fares have dropped in all markets of all sizes -- small, medium and large.
- On average, 2.2 carriers serve each route, up from 1.7 carriers just before deregulation -- evidence that removal of government barriers has permitted greater competition.
- The number of passengers on U.S. domestic flights has more than doubled, from about 240 million in 1977 to more than 600 million last year.
Reason Foundation president and economist Robert Poole blames the government's air traffic control system for flight delays. He says the Federal Aviation Administration isn't taking advantage of new technologies that allow multiple takeoffs and landings. He also predicts the proposed legislation would raise airline costs, which would be passed along to fliers in the form of higher ticket prices. By some estimates, fares could go up by as much as 14 percent.
Darryl Jenkins, an airline expert at George Washington University, figures that 42 percent of delays are caused by the air traffic control system, 23 percent by weather and the remainder by other causes, such as maintenance.
Poole and other experts believe that the solution lies in privatizing air traffic control. They report that levels of efficiency and service are far superior in countries which have done so.
Source: John Berlau, "Air Travelers' Forecast: Cloudy," Investor's Business Daily, March 31, 1999.
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