Feds now thinking about reregulating airlines

Please fasten your seat belt and return your tray table to an upright and locked position, because the federal government may be about to reregulate the airline industry.

It's been 20 years since Washington decided the friendly skies should operate as free markets, and some politicians are getting restless. They think the airline industry can be run more efficiently by-who else?--politicians.

The hallmark of airline deregulation has been lower prices and increased competition. But that hasn't stopped some lawmakers from proposing new regulations and subsidies to reduce prices further and increase the number of small competitors serving certain markets.

Before this attempt to "improve upon" the market gets out of hand, I'd like to take a moment to remind policymakers just how well deregulation has performed. Consider: Prices are down. Airline ticket prices have dropped 40% from their 1978 level.

There's more service. The number of airline departures has risen from 5 million in 1978 to 8.2 million in 1997-a 63% increase. Airlines served roughly 250 million passengers in 1978, but about 600 million in 1997.

The skies are safer. In the 15 years prior to deregulation, airlines averaged one fatal accident for every 830,000 flights. In the IS years after deregulation, airlines averaged only one fatal accident for every 1,400,000 flights.

Despite the evidence of deregulation's success, some see an even brighter future if government would reimpose strict pricing and service rules. There's a better way to achieve even lower prices and increased competition: getting government out of the airline business altogether.

The drive to reregulate airlines is not surprising since members of Congress left out a few important details when they deregulated the industry in 1978. To begin with, they ignored airports. Almost all airports in America remain publicly owned and operated. Not surprisingly, airports remain as poorly managed as your local Department of Motor Vehicles.

This causes all sorts of problems for airlines and travelers alike, notably congestion on the runways and a lack of competition at certain airports. In other words, don't blame just your airline for those long flight delays. Blame the local government that manages the airport.

The solution is not more regulation. It is turning over airport management to private companies more responsive to the needs of consumers. Cities could contract out various management functions or sell the airport outright to investors with an incentive to increase competition and decrease congestion, since that's the only way to satisfy customers and make a profit.

Another oversight during deregulation: Lawmakers left in place protectionist policies that shield U.S. airlines from competition. Most Americans don't realize it, but they're not allowed to choose foreign airlines for domestic travel. Essentially, the law forbids foreign airlines from offering Americans service even though the benefits of such competition are obvious.

After all, just think how uncompetitive our automobile or electronics industry would be today if Congress had restricted foreign competition. Consumers would be denied countless choices and pay higher prices for goods of inferior quality. Maybe Pat Buchanan and Ralph Nader want to live in a world without foreign cars and VCRs, but most American consumers don't.

Why then do we accept protectionist rules in the airline industry? We shouldn't. Any foreign airline should be allowed to offer domestic flights on the same terms as U.S. carriers. Richard Branson, the British entrepreneur and owner of Virgin Atlantic airlines, has already promised to create Virgin America airlines to offer competing service if Congress would simply repeal protectionist restrictions.

As Branson told Aviation Daily earlier this year, "Were Virgin Express to come to America, it would be a formidable competitor." Branson has also said he would comply with any special rules the government had, such as buying American planes and hiring American staff. And of course, all the same airline safety regulations would apply to Branson's company as to any other carrier.

Some will quibble that letting foreign airlines operate here poses a national security risk. That's absurd. Most competition would come from Britain and Japan, hardly enemies of the United States. And if Iraq tried to penetrate the U.S. market with "Saddam Airways" (motto: a bomb on every plane), we could just say no.

Copyright Human Events Publishing, Inc. Aug 7, 1998
Provided by ProQuest Information and Learning Company. All rights Reserved