Thursday, December 14, 2006

Airline Deregulation -- Again

Speaking of airline deregulation...

I don’t know if you caught it but Kai Ryssdal of MarketPlace had a story about the airline business on NPR just yesterday. It’s the same old story. Airline deregulation has been bad for the airline business but good for the traveling public. The “good” being mostly cheap airfares.

The “traveling public” does not equate to the American Public. Has deregulation been good for America ? Let’s look at what cheap airfares have done for America. According to Mr. Ryssdal’s story, there have been over 100 airline bankruptcies since deregulation. A quick search on NPR’s site reveals another story that the Pension Benefit Guaranty Corporation was 23 billion dollars in the hole -- last year. Who is the Pension Guaranty Corporation ? Us, the taxpayers.

If you delve into this mess, you’ll find a substantial portion of that deficit is due to airlines declaring bankruptcy -- not because of their pension liabilities but -- to terminate their pension liabilities. It’s a tactic to foist their pension obligations on the taxpayers so that the company can survive to fly another day in order to create even more destructive competition in the airline industry.

Let’s review. Airlines can’t make money in a deregulated environment. You can let all of them go bankrupt and the process will just start all over again. Well, actually we can’t afford to let them all go bankrupt. Air transportation is too vital to the national economy. Which is one reason the government keeps finding ways to bail them out. In order to survive in a system that isn’t survivable the airlines are bleeding their employees which will bring on a whole host of even more ills. In the meantime, they’re dumping their debts on the American Public -- the very same people that are supposedly reaping the rewards of “cheap” airfares. By the way, I don’t know if you’ve been flying lately or not but “rewarding” is not how I’d characterize the experience.

In case I didn’t make it clear earlier, the solution (or at least a solution) is sitting right in front of us. A 100-airplane -an-hour airport can’t accept but 100 airplanes an hour. (We won’t talk about weather -- for now.) Don’t let the airlines (or anybody else) schedule more than 100 an hour (unlike the 110, 120, 130 an hour that they do now.)

Somebody has to decide who gets those slots and I’d recommend the Federal government. They are supposed to be the fair arbitrator in our nation, the ones looking after the Public’s interest. (Have I mentioned how important I think public service is ?) The Free Marketeers would probably tell you that the “market” would do better job of it. But hey, they said that about airline deregulation too.

Don Brown
December 14, 2006

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