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April 24, 2012 9:34 AM Re-Regulating the Airlines: Event Livestream

By Ed Kilgore

As noted last week, today the Washington Monthly and the New America Foundation are co-hosting an event today based on “Terminal Sickness,” the article on the problems of the airlines industry by Phil Longman and Lina Khan that appeared in the March/April issue of the Monthly.

The event is just now getting underway, and a livestream is available here.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • Kathryn on April 24, 2012 10:07 AM:

    Worked for United Air Lines from 1965 to retirement in 2003. Company pushed deregulation naturally. The last raise in salary of any significance for employees was in the late 1970's, as a gander at your social security wage history will show. Since deregulation employees have had nothing but losses, no increase in compensation (tiny, tiny raises), followed by bankruptcy, loss of pensions (turned over to PBGC), significant cuts in wages, negative changes in work rules and vacation benefits, more hours flown for less and now merger with Continental, changes in long standing pass policy not advantageous to retirees. Obviously, deregulation has hurt the public at large too but above is just a paragraph on how employees have been impacted. No surprise, deregulation is horrible for employees.

  • Just Dropping By on April 24, 2012 10:20 AM:

    Kathryn, I don't see how you can parse the effect of airline deregulation out from the overall decline in the power of organized labor during the same time period. Plus any hypothetical re-regulation would be immediately accompanied by layoffs because literally the first thing the new regulatory body would have to do is force airlines to cancel a bunch of "redundant" routes where multiple carriers serve the same city pair.

  • TCinLA on April 24, 2012 12:06 PM:

    The one thing I really liked about that otherwise-pretty bad show "Pan Am" was watching a time when airline travel wasn't something to dread. Airlines were regulated, the workers from pilots to mechanics and baggage handlers had unions that worked, and airline travel was actually fun.

    Of course, there's one other thing that won't be mentioned at this conference: back then, airlines were run by airline guys, the same way steel mills were run by steel guys. There wasn't a #@#$%$#@!! MBA to be found, and the bean counters were kept apart from polite society in their small windowless rooms where they belonged. Nowadays, the guys who know the cost of everything and the value of nothing run the show, and nothing works because they don't actually know what they're doing, and are too ignorant to know that their B-school case studies don't work in the real world. You get the financialization of everything and the operation of nothing.

    Be interesting to see the wonks bring that one up.

  • TCinLA on April 24, 2012 12:10 PM:

    Plus any hypothetical re-regulation would be immediately accompanied by layoffs because literally the first thing the new regulatory body would have to do is force airlines to cancel a bunch of "redundant" routes where multiple carriers serve the same city pair.

    What are you? A moron or a Republican? Likely both. If you were to actually know anything about airline regulation and how it worked, you would know that what you describe is NOT how it worked. Several airlines operated to almost all cities, and to more cities than now. You idiot. If you are a Democrat, you're a damned embarrassment.

  • Andrew J. Lazarus on April 24, 2012 1:04 PM:

    TCinLA, you are must be a youngster. There were a few 'trunk' airlines, but remarkably little overlap in their routes. Regional carriers were for all intents and purposes monopolies, while the trunk airlines were a cartel that were required to charge the same fares. These fares were often double or even triple today's (adjusting for inflation), so the first thing that would happen under re-regulation is massive fare increases, followed by layoffs when flights were reduced. The remaining employees could, of course, be paid higher wages: monopolies can do that. If we had a monopoly on cafés with minimum (much higher) prices and government-dictated geographic locations, baristas could be paid much more, too. And a lot fewer people could get coffee.

  • Don K on April 24, 2012 1:14 PM:

    My memory of events in 1978 is that the only segment of the airline industry that was in favor of deregulation was the management of American Airlines. Management of all of the other airlines, IIRC, along with the various unions, opposed it.

    Now, I'll admit that deregulation has been a factor in the decline of compensation of airline employees. By the same token, competition from Japanese car makers was a factor in declining compensation for UAW members and other employees of the U.S. auto manufacturers (I was an employee of one such during my working years). Does it then follow that the U.S. government should have banned imports of foreign cars and car parts during the 1970's? In my opinion, the benefits to U.S. consumers of foreign competition outweighed the effect on autoworkers, and the government made the right decision.

    So, with that in mind, has airline deregulation resulted in net benefits to the U.S.? I'd argue the answer is yes.

    Clearly, airline employees and shareholders are worse off than they were under deregulation. Arguably business travelers, who traveled on half-empty planes and enjoyed greater legroom in coach and more flight attendants per passenger, are worse off. Flyers in small towns such as Wolf Point, Minot, and Dodge City are worse off.

    I'd argue that the bulk of airline passengers, many of whom couldn't afford to fly in the pre-deregulation days, are better off. Flyers in hub cities such as Detroit, Philadelphia, Charlotte, and Salt Lake City have way more choices than they had previously. The same is true of smaller cities such as Providence, Manchester, Harrisburg, and Birmingham. Even cities such as Cincinnati, Memphis, and Pittsburgh have more choices in flying than they had in 1978.

    Longman and Khan complain about deregulation, then for the cities they profile they compare the situation today to the situation five or ten years ago, which also was in the deregulated environment. Compared with the situation under regulation, the flights lost by Cincinnati tend to be the short-range flights to places like Dayton, Columbus, Louisville, and Fort Wayne. Should Delta (or another airline) be forced to fly a couple of flights a day between Cincinnati and Fort Wayne to accommodate a few people who might like to fly rather than drive?

    A return to regulation, if it were to result in higher compensation for airline employees, higher profits for the industry, and more choices of flights from non-hub cities, would have to mean increased average fare levels, which would mean fewer passengers, particularly among leisure travelers. This would benefit business travelers (more half-empty planes, maybe lower fares if re-regulation meant a return to one price fits all pricing), but would be a cost to today's average traveler.

  • Kathryn on April 24, 2012 1:29 PM:

    Not parsing the effect of airline deregulation as not being part of the overall decline in organized labor in the same time frame. I'm well aware that unions have been in decline in power and participation for decades. Simply thought a brief paragraph about the decline of that Industry would be of mild interest since I saw first hand the decline for employees at United. It was a tolerable job even with stalled pay as working conditions did not deteriorate until the bankruptcy. Since then, it's quite difficult to earn a living wage without working many more days with considerably worse working conditions. I was most fortunate to be old enough (a mixed blessing!) to leave when I did and retain the full amount of my pension which pilots and higher paid union employees did not. Current employees who were not 50 when the deal with PBGC was sealed are getting very little when they retire because of how it was structured. Many of those folks have two or three decades of employment at United and they are frankly getting a pretty raw deal.

    The current head of the PBGC (Obama appointment) held American Air Lines feet to the fire and those folks will get the pension they earned from American, not from the PBGC, which is not commonly known.

  • Andrew J. Lazarus on April 24, 2012 1:51 PM:

    Thanks for the reasoned comment, DonK. I wrote like you on the first airlines thread, but I've been getting increasingly impatient with such lazy preference for the "regulated" anti-free-market. I don't think it does liberals much good to be identified with pro-business-traveler socialism.

    Just one point: another reason those short-haul flights are not coming back is that back in the regulated era, we were also pre-hijacking. Boarding an airplane was significantly faster, even the airlines thought arriving at the terminal half an hour before a domestic flight was ample.

  • Crissa on April 25, 2012 6:09 AM:

    These aren't short flights we're talking about; travelling severeal hundred miles isn't short.

    Some re-regulation may be needed, like charging the airlines peboarding pass issued and bag scanned at the security line, as we ll as getting trades in kind so air travel is spread out across the nation fairly.