Robert Poole on Airline Deregulation
By David Henderson
Bob Poole of the Reason Foundation has written an outstanding article on airline deregulation. He gives a nice history of the issue, filled with lots of facts about the effects of deregulation and about where we need to go next: pricing landings better and following countries like Canada in getting rid of our antiquated socialist (pardon the redundancy) system of air traffic control.
Bob, by the way, wrote a piece in Reason in 1969, “Fly the Frenzied Skies,” that was only the second thing I ever read on airline deregulation. The first was then-graduate student Sam Peltzman‘s excellent piece in the New Individualist Review.
Some excerpts follow.
On the seeming impossibility of deregulation:
My very first Reason article, in 1969, argued that airlines should be allowed to fly wherever they wanted and charge whatever prices they thought sensible. My dad, then a facilities engineer at Eastern Airlines, read the article, laughed, and told me that would never happen.
Nine years later, the impossible did happen. Congress moved to phase out price and entry controls and set a date–January 1, 1985–for the CAB to disband, which it did, on schedule.
An excerpt on how the politics helped deregulation:
United Airlines played a uniquely important role. After repeatedly being denied access to new routes by the CAB, it broke with the other major carriers and refused to support the status quo. The company pushed for reform starting in 1974, which prevented the airline trade association from choosing sides, since its policy was to take positions on policy issues only if all member airlines agreed.
Do read the whole thing.
One thing Bob left out is that he didn’t mention the idea of allowing foreign airlines to compete on domestic routes. That would give a boost to competition.
The Concise Encyclopedia of Economics, first edition, has a piece on deregulation by the late Alfred Kahn, the chairman of the Civil Aeronautics Board who did so much in the late 1970s to deregulate. The second edition has a piece by Fred L. Smith, Jr. and Braden Cox in which the authors take it to the next step.