Published on Wednesday, June 6, 2001 in the Madison Capital Times
Airline Deregulation Hurt Consumers
by Dave Zweifel
It has been 23 years now since the nation's airlines were "freed of the shackles" of government regulation.
Air travel would improve, we were told, because there would be vigorous competition among the airline companies to attract customers.
Besides, the deregulation disciples assured us, getting the government's nose out of the airline industry would spur new airlines that would offer cut-rate fares and force the larger airlines to lower their fares accordingly to keep their business.
And, indeed, some claim that's what happened in these past 23 years. Studies have shown that fares have fallen an average of 27 percent and the average route now has 2.2 carriers, compared to 1.7 before deregulation.
But not so fast, argues New York University Professor Merrill Goozner in a recent issue of American Prospect magazine.
There are other studies that show that the 27 percent drop in fares is more a result of technology and that fares, adjusted for fuel costs, actually were declining at a faster rate before deregulation.
"Much of the so-called competition fostered by deregulation is a mirage: Smaller airlines are put out of commission in no time by the dominant carriers, who weather temporary price cuts and then jack up the rates again after they've outlasted their challengers," the professor insists.
"And quality of air travel has taken a major nosedive, with long delays, crowded planes and an opaque fare structure that gouges travelers who have to book or change reservations on short notice, as well as anyone who happens to live in a monopolized urban hub or a small city," he adds.
Goozner's piece goes on to detail several instances where new airlines were founded only to be put out of business within a few months because the majors would undercut them at a loss until they had to declare bankruptcy and go away.
Besides, because of merger mania and acquisitions there are now fewer airline companies with which to do business. Instead of consumers enjoying the benefit of competition, they're now held hostage to competition's nemesis, the mega-conglomerate.
And, because there is no government regulation, there's nothing that can be done about it.
Copyright 2001 The Capital Times