Posted on 04/05/2006 3:34:50 PM PDT by phantomworker
PARIS A man who played a key role in the deregulation of the U.S. airline industry in 1980, Tom Allison, at the time chief counsel to the U.S. Senate Commerce Committee, says that if senators had known then what they know now about airline deregulation, they would never have passed the measure.
Allison says that by lifting restrictions on airline competition, and on where airlines could fly, Congress unintentionally created unending disruption and cost to both industry and consumers, with gross accompanying inefficiencies.
In an interview given to the International Herald Tribune in February, intended to influence the current debate in Europe over airline
(Excerpt) Read more at iht.com ...
Airline industry ping
Deregulation sure worked for me. I could finally afford to go skiing out West a couple of times a year and didn't have to drive.
Meaning the mess the airlines got themselves into was due to mismanagement and greed?
I'm not much of an expert on this, but I don't assume much competence for Congress either, or any bureaucracies they set up to control private industry. But I imagine some airlines have competent management and will do well, while others don't, and won't.
One thing is clear, the airline business is a tough one; the equipment is tremendously expensive and so are the labor costs.
Sounds to me like the sort of 'creative destruction' that capitalism is famous for. As I recall the regulated days, you had to have a lot of money to fly, and you were among the elite if you did. Nowadays, every beer-swilling prole can afford to plop his sweaty butt down in the seat next to me. I kind of miss the olden days, but you have to admit that things are better for the lower-class travelers who aren't relegated to Grayhound anymore.
At least 2 airlines: Southwest & Airtran repectively.
"Creative destruction."
Interesting.
I love SouthWest. I just wish they went interenational to Europe. American / Delta would never see another dime of mine again.
...it's possible you may Never get another chance to toss the Widget People another dime.
The real issue is that airline deregulation was insufficient, because the industry was only partially deregulated. When you have the Federal government assuming pension liabilities for bankrupt airlines, and when you have privately-owned airline companies operating at publicly-owned airports, then you don't really have a deregulated industry at all.
The concept of "Creative Destruction" was seminal work by Joseph A. Schumpeter in his book "Capitalism, Socialism and Democracy" originally published in 1942! Do MBA students still study his work?
Ok! I understand what you are saying. Thanks!
I wonder how it could have been done differently. Many of our airports are public port authorities. And what about the pensions? Just default on them?
Meaning that managing a regulated company is very different from running one in a competitive environment. The first mistake was to launch into an all out price war for the sake of market share. This led to flat earning picture and an overloaded operating system. From there on its has been nothing but a retreat on all fronts, with customer service, quality, salaries, and security headed down hill fast, while airports were transformed from exciting launching points into human cattle pens.
Great propaganda piece.
A Government Accountability Office report in 1996 found that the average fare per passenger mile was about 9% lower in 1994 than in 1979. Between 1976 and 1990 the paid fare had declined approximately 30% in inflation-adjusted terms. Passenger loads have risen, partly because airlines can now transfer larger aircraft to busier routes and replace them with smaller ones on shorter, low-traffic routes.
I'd say a 30% decline in price equals sucess.
Finally, we are starting to see better service in the form of nonstop direct flights. I am definately willing to pay more for that.
At some point I think you're going to start seeing some of these airports privatized. Stewart Airport in New York (about an hour north of NY City) is now owned by a private company, and if it turns out to be a successful venture then it might start a trend.
And what about the pensions? Just default on them?
That's basically what happens when the Federal government takes over the pension plan. The older workers and recent retirees are covered, but the next generation of employees is not. This is why personal 401(k) and IRA plans are slowly replacing the employer-run pension plan as the ideal retirement plan in this country -- because no company can make any long-term guarantees about its own solvency.
Very interesting. I ran a simulation study of ramp operations at Seatac a couple years ago and you're right, I'll bet privatizing the airport would make it a lot more efficient. The trick might be how to "sell" public property if they are making a profit on it.
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