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Now that the government is busy regulating broad swaths of the American economy, isn’t it time to consider re-regulating one more sliver? Shouldn’t we do something about the airline industry?
Of course we should.
Airline deregulation seemed like a good idea three decades ago. The Airline Deregulation Act sought to make the commercial aviation industry more competitive by lifting government controls and allowing airlines to compete with each other.
But oh, what a disaster it turned out to be. If you’re a passenger, you’re seeing the results of a recklessly deregulated airline industry right now. Airlines treat us like cargo — and they get away with it because the government has taken a “hands off” approach to the industry.
Airlines must also look back on the pre-deregulation days with fondness. In the three decades before deregulation, the commercial aviation industry had only three unprofitable years. Since then, it’s had 14 losing years.
Turns out their customers were tougher regulators than the government. Passenger yields, a measure of how much money is made for each mile a customer flies, have plummeted from 8.29 cents per mile in 1978 to 4.06 cents per mile last year when adjusted for inflation. That number suggests flying is more affordable than ever, despite the recent doom-and-gloom reports of rising fares. It also says airlines are barely able to make any money from the fares they charge.
So, is anyone happy?
No.
Here are eight things the government should consider regulating.
Ticket prices
Airlines shouldn’t be allowed to offer unreasonably low fares. It’s just a game. They’ll figure out a way to add surcharges and other fees to cover their costs. (More on that in a moment.) Maybe it’s time to consider the idea of minimum fares, which would achieve two things: First, they would ensure that airlines continue operating. And second, they would eliminate the reprehensible practice of predatory pricing, where a dominant airline lowers fares so aggressively that it drives a new competitor out of town — and eventually, out of business. But should the government regulate prices? Actually, it already does in some places right here in the U.S. of A., including controlling prices on everything from apartment rents to utilities.
Executive pay
Delta Air Lines chief executive Richard Anderson will pick up stock awards worth about $13.6 million beginning next year as a reward for merging with ailing Northwest Airlines. Delta lost $50 million last quarter. Do you really need me to tell you this is madness? Airlines that accept any kind of government help — whether it’s loan guarantees or tax breaks — ought to be required to cap their executive compensation. If banks can do it, so can airlines.
Disclosure
The price of an airline ticket must include all taxes, fees, surcharges, drinks and meals (on longer flights), a piece of checked luggage and a carry-on bag. The European Union is about to require this kind of price transparency. Why not here? There’s only one reason I can think of: By deceiving customers into thinking tickets are cheaper than they are, cash-starved carriers can sell more seats. Long term, they aren’t doing themselves or their customers any favors by misrepresenting the true cost of a ticket.
Human rights
Seats should come with minimum legroom and a minimum width, consistent with the average height and weight of passengers. On longer flights, essentials like water and food need to be included in the price of a ticket. Passengers shouldn’t be imprisoned on a plane that’s parked at the terminal without access to working restrooms. It’s astonishing that airlines need to be told that this is the right thing to do. They should already be doing it. But since they’ve lost their moral bearings — indeed, animals in the cargo hold are often treated better than paying customers in economy class — perhaps it’s time the government helped them find it.
The truth
Airlines should be required to give passengers the facts about delays and cancellations. No more blaming the weather when it’s actually a mechanical problem. No more “creeping” delays in which customers are strung along, often for hours, until their flight is canceled. Airlines should not be permitted to sell more seats than they have. That would take care of the problem of involuntary denied boarding — better known as “bumping.” No more codesharing, either. It’s fundamentally dishonest and should be illegal.
Frequent flier programs
Airline loyalty programs have been referred to as unregulated lotteries. Personally, I think they’re the biggest scam ever perpetrated on the traveling public. Let’s regulate the lottery, at least. Maybe it’s time to require airlines to tell us how many miles are outstanding, how many award seats are available on a given flight, and how much our miles are worth. Oh, and award tickets should be free. (Otherwise they’re not “award” tickets, right? They’re just tickets.) Air carriers should be required to file their program member agreements with the government and to ask for its permission when they make a change to it. Better yet, we should abolish loyalty programs, because on balance, they hurt consumers.
Passenger compensation
In 2004, the European Union adopted tough new airline passenger rights regulations that required airlines to compensate air travelers when flights were delayed and canceled. Regulation 261 (PDF) isn’t without its problems (for example, it has a provision that lets airlines off the hook during “extraordinary” circumstances, which are not well-defined) but it goes much further than any current American regulations in ensuring delayed passengers are treated fairly. In addition to adopting a 261-like rule, the government should require that airlines ask for and receive approval to change their contracts of carriage — the legal agreement between them and their passengers. Gaping loopholes in the contract need to be closed, too. Among them: airlines need to compensate passengers for all of the property in a lost or damaged bag, not just a select few items.
Common sense
While we’re at it, the government should consider making a few tweaks to the way airlines do business. For example, airline tickets should be transferable. Changing the name on a ticket, particularly if you’ve made a typographical error, shouldn’t cost an extra cent. (After all, it doesn’t cost the airline anything to change an electronic ticket.) A change fee shouldn’t be more expensive than the ticket, either. What’s more, a ticket ought to represent an airline’s obligation to get you to your destination when it says it will — not when it gets around to it. I realize that common sense can’t always be legislated, but that shouldn’t stop us from trying. The Transportation Department should be given broader authority to stop some of these outrageous airline practices.
If you’ve made it this far in my deregulation diatribe, you’ve probably arrived at one of two conclusions. One, you think I’m a socialist. That’s fine. I’ve been called worse.
Or two, you’re wondering if it’s such a good idea for the government to get involved in the airline industry. That’s a reasonable response. To which I would say: No worse than if the government didn’t get involved.
It isn’t hard to imagine a future in which the few surviving airlines are virtual monopolies. It’s a world where fees and surcharges account for the bulk of your ticket price, where customers are never right, and in which you would do anything to avoid air travel.
Do you really want to go there?
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 | Christopher Elliot of MSNBC makes pathetic argument for airline re-regulation | Dr Danny | Tue Nov 25 | 10 |
| The unfriendly skies: Best and worst of air travel | Associated Press | Mon Nov 24 | 1 |
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{"commentId":4191115,"authorDomain":"amriksidhu"}
Thank you Dear Christopher Elliot,
About time someone took the courage to spell out the truth. Let me first comment on the people who are going to call you a socialist. What do they think of all the bailouts. A bailout according to them is good when it helps them in some way, but bad, when it helps someone else it can even be called a socialist act. Trust me if the companies that are being bailed out now are not helped every one will be in trouble. GM, Chrysler, Ford, AIG, City Group, Lehman Bros., Freddy, Fannie, all airlines earlier on and the list goes on, were all deregulated and their CEO's contracts were written so that only if they bankrupted their companies will they get Golden Parachutes. What an incentive, remember Home Depot's CEO.
That is what happens when there is no regulation (Law).
In order for America to regain its place in the world, no executive of any publicly traded company should earn more than the President of the United States and go to jail if he or she messes up the company. The same goes for wall street bullies. If the executives want to earn more then they should open up their own private businesses.
Publicly traded companies use public funds, pension funds and therefore must be tightly regulated.
America is a capitalist country and everyone has rights, including the people.
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#26 - Mon Nov 24, 2008 7:04 PM EST{"commentId":4198540,"authorDomain":"jennystent"}
The more I read posts like these, the more I realize the only way we'll learn our lesson is to go through another huge depression. Sure I understand the principle of freedom and not force and you understand it. But this poster and countless others actually believe what they are saying! For some people the only way they "get it" is through suffering.
{"commentId":4198540,"threadId":"427149","contentId":"2145092","authorDomain":"jennystent"}
- 1 vote
{"commentId":4192461,"authorDomain":"Josh-Levin"}
How about getting rid of airlines completely, at least for overland flights of up to 2500 miles. Check out LeviCar.com.
{"commentId":4192461,"threadId":"427149","contentId":"2145092","authorDomain":"Josh-Levin"}
#27 - Mon Nov 24, 2008 9:11 PM EST{"commentId":4192995,"authorDomain":"trvlnby"}
As much as we might hope regulation will help what ails the airline industry, it will never be a regulated industry like it was prior to the late 1970's. The clock is never turned back and industries are not re-regulated unless they collapse, as the banks and financial institutions were close to doing. Airlnes are now a utility like water or power. Profit and the Bottom Line are the primary focus, not service. As a traveling public, we got what we wanted. We have cheap fares and frequent service. Today you can still fly to more cities chaper than you could in 1975! However, the service and care are gone. Market forces will probably weed out the airline with the "worst" service, but it is proved daily that there is always someone online ready to by that $199.99 West Coast Special if you choose not to.
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#28 - Mon Nov 24, 2008 10:06 PM EST{"commentId":4194031,"authorDomain":"grice33"}
The economic ignorance of the youthful writer of this argument is enormous. What he hopes to 'fix' in the airline industry with re-regulation has very little connection to the actual regulations he proposes. Before de-regulation, airline prices were VERY high compared to average income, airlines couldn't have been more customer unfriendly, and choices were ver limited. Only the weathy could afford to fly regularly, the rest of us had to save for ages to afford a single ticket. Unlike now when ANYONE can afford a ticket to almost anywhere. I know this because I am old enough to have flown before de-regulation. I am also old enough to have been educated to understand that highly regulated societies like the Soviet Union, China, and Europe have stagnant economies, few choices, frequent shortages, and general misery. Unfortunately the youth in America, like the writer, have been educated by over-paid professors of socialism and thus they mouth the ridiculous Maxist theories of top-down regulation as if they had credibility. AMAZING!
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#29 - Tue Nov 25, 2008 12:22 AM EST{"commentId":4195179,"authorDomain":"lakeworthguy"}
You're actually comparing the Soviet Union and China to Europe?????
Wow...
Only the weathy could afford to fly regularly, the rest of us had to save for ages to afford a single ticket.
And that's a problem because....? There would be less frivolous travel? Less noise? Less pollution? Less waste? I'm looking for the downside here....help me out.
{"commentId":4195179,"threadId":"427149","contentId":"2145092","authorDomain":"lakeworthguy"}
{"commentId":4194275,"authorDomain":"kenne"}
How would a company go about running a profitable airline?
1. Pay no taxes in unprofitable years, save up and write off those losses in profitable years, resulting in no taxes paid, ever. Why should any company pay taxes like peasant wage earners? Airlines want zero taxes plus credits and refunds every year.
2. Get the government to underwrite your expenses. The entire air traffic control system is free, equipment, upgrades, employees and all. Make sure the government stays out of looking at airlines as a major pollution source such as automobiles. It's GOOD to warm the atmosphere with tons of jet exhaust every day.
3. Outsource maintenance to second world countries, and lobby the Administration to fire the government inspectors who used to check if the claimed maintenance actually occurred. It's cheaper to have "maintenance delays" of our flights and fix them on the runway than to actually DO the maintenance. Deregulation at it's finest.
4. Drag your feet on implementing safety regulations. Remember the Florida ValuJet crash 12 years ago? Cargo holds still have no fire suppression systems, much less even fire detection systems; it's "voluntary". It's cheaper for airlines to litigate death claims than to prevent them.
5. Keep ticket prices as high as the market will bear. Remember the whining about higher fuel prices? Jet-A fuel is 30% cheaper than a year ago. Even though fuel is the biggest component of airline operating costs, does my airline cut ticket prices by 30%? No way.
My motto: socialize costs but privatize profits. Oink! I want more public money in my trough and I want it NOW!
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#30 - Tue Nov 25, 2008 1:00 AM EST{"commentId":4196298,"authorDomain":"edw-hanson"}
The part about deregulation everyone seems to be forgetting about is aircraft maintenance. Before deregulation, the FAA had inspectors out monitoring repairs and maintenance schedules. Now, no FAA monitors, and all the maintenance is done overseas in Asia, by the lowest bidder. The result is a disaster just waiting to happen. Stories of maintenance nightmares and equipment failures don't make it to the front page news, but the incidence level is way up. I won't fly until A) the airports stop treating passengers like terrorists, and B) maintenance is returned to the companies who own and fly the planes, and the work is done by certified union aircraft mechanics.
{"commentId":4196298,"threadId":"427149","contentId":"2145092","authorDomain":"edw-hanson"}
- 1 vote
#31 - Tue Nov 25, 2008 9:26 AM EST{"commentId":4198189,"authorDomain":"jennystent"}
The only thing this editorial said of any value was that passengers turned out to be tougher regulators than the government. EXACTLY! Which is the way it should be. When will these people realize that self-reliance is the ONLY way to operate a society? Regulation or "FORCE" will never, I repeat, never yield better results than VOLUNTARY exchange.
The author asks "is anybody happy?" Then says No. The real answer to that is that if people have Volunarily entered into an agreement for air transportation, both the carrier and passenger are happier than before they entered the agreement or they wouldn't have made the agreement.
Funny how people are all for regulation as long as it benefits them at the expense of the other party."Hey SISSY if you don't give me what I want I'll tell MOM and she'll MAKE you do it!"
{"commentId":4198189,"threadId":"427149","contentId":"2145092","authorDomain":"jennystent"}
- 1 vote
#32 - Tue Nov 25, 2008 11:52 AM EST{"commentId":4198608,"authorDomain":"f18jets"}
Does the government really do a good job running anything? Regulation leads to less competition, higher costs and higher prices. Remember history always repeats itself when you mix government with economics. "The market" which many see as only a few is in reality everyone. No matter how free an economy is or how heavily regulated it is, the economy of that country will go up and down. Empirical data shows no matter how much regulation on an economy you have to prevent downturn or economic "inequality", the situation is only worsened.
{"commentId":4198608,"threadId":"427149","contentId":"2145092","authorDomain":"f18jets"}
- 2 votes
#33 - Tue Nov 25, 2008 12:19 PM EST{"commentId":4200817,"authorDomain":"coffenut"}
I remember when flying not only was comfortable but was fun. Sure I would like the lowest possible price, but I am also willing to pay for comfort ... I am tired of being treated like cattle for the amount of money that I am paying.
{"commentId":4200817,"threadId":"427149","contentId":"2145092","authorDomain":"coffenut"}
#34 - Tue Nov 25, 2008 2:42 PM EST{"commentId":4200908,"authorDomain":"f18jets"}
Then fly first class. The rate is equal to what you would pay for coach under a regulated system.
{"commentId":4200908,"threadId":"427149","contentId":"2145092","authorDomain":"f18jets"}
- 1 vote
{"commentId":4203622,"authorDomain":"celalawyer05"}
People need to get a dictionary. Regulation is not socialism, it is the part of capatalism used to deal with the mass accumulation of competitors resulting in monopolies and oligopolies. Capatalism basically dies without regulation as the ultimate end of un-regulated markets is total control by one or a few entities. Basic resources such as energy, communications, water, and travel need to be regulated in order to maintain a viable market and ensure fair distribution of national resources. The chaos that exists today and the incredible level of oligopoly control being used by vendors in several areas, such as energy, communications and travel, should scare the hell out of everyone. The fact that things got worse when these companies took control of the government through Bush and buddies, and how bad things have become in the economy should alert everyone for the need to re-regulate several industries. I would start with oil/energy and banking. The moves by the Fed and treasury are the largest transfer of wealth to the upper class in the history of man. And guess what, not a nickle has trickled down. Suprise. Yes, reregulate the airline industry before it is too late. And also reregulate a lot of other businesses before we are nothing but a third world country sitting in our own offal.
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#35 - Tue Nov 25, 2008 6:33 PM EST{"commentId":4205500,"authorDomain":"travelwithbev"}
I have been in the travel and airline business for over 25 years. I can tell you that everything was better during regulation. People afforded to fly, don't think they didn't. When I worked for an airline before deregulation, we were rarely empty. Cheaper is not always better. From every perspective, the airline industry is a shadow of it's former self. I drive across country now rather than go through the frustration and indignity of flying. No other business in the world can be run the way the airlines are run. Absolutely devoid of good management, strategic planning and customer service. Every day I shake my head in amazement at some of the business decisions made within the hallowed halls of the home offices. Where in the world do they come up with this stuff? Trust me, the airlines NEED regulation--they are apparently not able to manage their own business or they would be profitable and their customers would actually look forward to flying. Disgusting.
{"commentId":4205500,"threadId":"427149","contentId":"2145092","authorDomain":"travelwithbev"}
#36 - Tue Nov 25, 2008 10:12 PM EST{"commentId":4208041,"authorDomain":"bruce0747"}
Americans are too cheap to pay a fair price so eventually the industry will go the way of Detroit.But we all know that Detroit went for the opposite reason.
{"commentId":4208041,"threadId":"427149","contentId":"2145092","authorDomain":"bruce0747"}
#37 - Wed Nov 26, 2008 9:04 AM EST{"commentId":4796532,"authorDomain":"jaynarey-1"}
As one who works in the airline industry....I am 100% in FAVOR of Re-regulation. It has been an absolute disaster. Flying is not a "right" it is a highly convenient mode of rapid transportation from point A to point B. Fares are SO low...that everyone can afford to fly today and that should NOT be the case. When the economics of the industry are so perverted that it is cheaper to fly to a destination, than to drive there....something is seriously wrong. Airlines are like utilities....the MUST be regulated in my opinion.
Yes...airline travel was expensive under regulation....but you get what you pay for.
We should definitely return to that model of stability....with uncrowded planes....and real service once again. Deregulation has turned even the premier airlines into cattle cars because of the low cost no-frills competition that we are forced to compete with.
Re-regulate NOW !!!
{"commentId":4796532,"threadId":"427149","contentId":"2145092","authorDomain":"jaynarey-1"}
#38 - Tue Jan 13, 2009 5:31 PM EST{"commentId":5522929,"authorDomain":"jo-mcneil"}
I agree! The state of the airline experience is a perfect example of socialism. When everyone can do everything - then most of it isn't worth doing. Yes, flying is cheap and everyone can do it, but it's terrible; the employees don't receive fair wages and are miserable and the flying public is getting a terrible service and is miserable - but everyone can do it!
{"commentId":5522929,"threadId":"427149","contentId":"2145092","authorDomain":"jo-mcneil"}
{"commentId":4796769,"authorDomain":"stvglmr"}
Now now Tex, you should know better then to suggest regulating industries that expect taxpayer bailouts when they perform badly.
{"commentId":4796769,"threadId":"427149","contentId":"2145092","authorDomain":"stvglmr"}
#39 - Tue Jan 13, 2009 5:46 PM EST{"commentId":10407328,"authorDomain":"breelaboy"}
{"commentId":10407335,"authorDomain":"breelaboy"}
{"commentId":10438108,"authorDomain":"brianalampton"}
{"commentId":10438120,"authorDomain":"brianalampton"}
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