Here’s a secret that isn’t a secret: The airline industry is broken. We all know it—except for airline executives and their most die-hard supporters.
It’s broken, but it’s also a vital industry that American taxpayers periodically are forced to bail out. And what have we gotten for our money? More dysfunction.
My organization, American Economic Liberties Project, developed a full suite of recommendations and earlier this month we shared them with the public and lawmakers in Washington. "How to Fix Flying: A New Approach to Regulating the Airline Industry" is a paper I co-wrote with Ganesh Sitaraman of Vanderbilt University. We tackle competition, access, regional inequality and underserved communities, pricing, passenger protections, and of course, safety.
I’ve spent a good chunk of the last year studying the movement that led to President Carter signing the Airline Deregulation Act (ADA) in October 1978, which ended 40 years of government control via the Civil Aeronautics Board. The CAB had previously determined “routes and rates” by overseeing scheduling and pricing, like government has with most utilities, but ultimately a movement, one that was supported on the right but spurred by the left, remade the face of airline travel.
For several years in the 1970s, a true national discussion took place, and it ultimately determined that the free market might be able to do better.
Their intentions were good, but after 45 years it’s apparent that the movement failed.
All one needs to do is read the legislation itself to confirm its failure. It’s written in the act. What were we promised? The very first sentence predicted that the ADA would foster “maximum reliance on competition.” And “the avoidance of unreasonable industry concentration.” And “the encouragement of entry…by new air carriers.”
Can anyone seriously argue the promises made by the Airline Deregulation Act have actually been fulfilled?
Today we have 1) the lowest total (12) of scheduled passenger airlines in a century; 2) the greatest concentration within the industry, as the oligopoly of the Big Four—American, Delta, Southwest, and United—controls 80% of our market; and 3) the longest stretch of time (2007–2021) without a single new-entrant airline.
Not surprisingly, the ranks of people who believe deregulation failed has grown. In 2015, Arthur Frommer called for a fresh look at what deregulation has wrought: “In a modern democracy, ‘regulation’ is no longer a dirty word.” He also clarified what makes airlines unique in American life: “The airline industry has grown to be a ‘public utility’ vital to both our commercial and non-commercial lives. Few of us can avoid relying on airlines for our transportation needs. And today’s airlines are operating as monopolists, charging what they alone determine without the need to confront competitive pressures. Unlike with other products, we cannot go down the street to purchase an alternative.”
Proponents will tell you that deregulation spurred more Americans to fly, caused airfares to fall, and made air travel safer. Yet we have documented that all three of these trends started 20 years before the ADA and were more pronounced in the years prior to 1978, which undermines the suggestion that the ADA caused them.
So what are we suggesting? A detailed list of recommendations for Congress, the White House, the U.S. Department of Transportation (DOT), and the Federal Aviation Administration (FAA).
We created what we believe are credible solutions that will prevent us from falling back on the same old Whac-A-Mole reactions after every crisis du jour—cancellations, meltdowns, unpaid refunds, staffing shortages, near-misses, ruptured fuselages, etc. Some of our proposals will require discussion and debate and could take years to enact, while other suggestions could be addressed more quickly.
Among the many recommendations we offer in "How to Fix Flying" (which you can read here):
• eliminate foreign outsourcing of aircraft maintenance by U.S. airlines
• effectively increase budgeting and staffing for the Federal Aviation Administration (FAA)
• protect infants by banning lap children inflight and make flying more accessible for the disabled
• reorder airline economics and pricing to serve underserved and unserved cities nationwide
• downsize the majors’ fortress hubs
• mandate airport access and facilities for smaller and low-fare carriers
• eliminate Wall Street “common ownership” so that investors may not own significant stock in more than one airline, which keeps out new-entrant airlines
• require airlines to have resiliency plans for pandemics and other emergencies
• enact mandatory rather than voluntary passenger rights protections
• end abusive frequent flyer program policies
• bring back "interlining" so competing airlines must honor each other’s tickets during flight irregularities
• and much more
There’s a role for you here too.
The commercial aviation industry hires some of the biggest lobbyists in Washington, but Congress, the DOT, and the FAA don't hear from travelers often enough.
In many meetings with DOT staff, I and other passenger advocates have been told repeatedly that low levels of complaints by you, the flyers, are interpreted to mean passengers are not concerned about fixing problems.
So your voice is critical if things are ever going to change, and you can give it at these direct links:
Federal Aviation Administration
That national discussion that took place in the 1970s was broad and comprehensive, and the combination of Congressional hearings and extensive media coverage amplified an array of voices—passengers, labor, travel agents, city and state leaders, economists, airport managers, airline CEOs, and government regulators.
This is our chance to make the U.S. airline industry work well again. We encourage you to read our proposals, to send your opinions to the government, and to feel free to send feedback to us at wmcgee@economicliberties.us.
It’s been half a century. It truly is time for a new discussion. We all know it.
And AELP and Vanderbilt are asking you to raise your voice. It’s time.
William J. McGee is the Senior Fellow for Aviation & Travel at American Economic Liberties Project. An FAA-licensed aircraft dispatcher, he spent seven years in airline flight operations management and was Editor-in-Chief of Consumer Reports Travel Letter. He is the author of Attention All Passengers and teaches at Vaughn College of Aeronautics. There is more at www.economicliberties.us/william-mcgee/.
