This Is Why Flying Is So Awful | Ganesh Sitaraman
Good coverage of his theories in 2024-01-28 Jeff Neal - Airline deregulation may be why flying is such a miserable part of holiday travel.
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Almost everywhere you look, there’s airline trouble. A tragic crash at LaGuardia Airport. Long lines at airport security. Thousands of cancellations because of bad weather in Dallas and Atlanta. Higher prices. More proposed airline mergers. And a spate of near misses in the sky.
You could blame human error or partisan fights in Washington for some of these issues, but there is a deeper story behind the turbulence: Nearly half a century ago, the U.S. government abandoned its position that regulation and investment were critical elements for America’s transportation infrastructure.[1]
If you remember the days of ample leg room, metal silverware and complimentary drinks, you know flying hasn’t always been like this. That’s largely because of deregulation. After the Wall Street crash of 1929 nearly caused the airline industry to collapse, the government stepped in with a comprehensive regulatory system.
A federal agency, the Civil Aeronautics Board, regulated the routes airlines could fly and the prices they could charge. The board ensured that there weren’t too many airlines, which might have led to bankruptcies and bailouts, or too few, which would have fueled monopoly and abuses of power. It also made sure that small, medium-size and large cities were served — and that no airline was too powerful at any one hub.
Despite some challenges, the system mostly worked pretty well: Prices steadily went down after World War II, more and more people flew, and there were major innovations, including the shift from propeller planes to jets. After midair collisions in 1956 and 1958, Congress passed new safety regulations. Regulated competition created a race to the top for service — sometimes to excess, with steak dinners and free alcohol in coach. But there were also small hubs all around the country, spreading economic opportunity and growth.
In the 1970s, everything began to shift. Then, as now, oil shocks, inflation and economic stagnation created a moment for radical economic change. Led largely by Democrats, including Senator Ted Kennedy and the future Supreme Court justice Stephen Breyer, policymakers argued that if airlines could fly wherever they wanted and charge whatever they wanted, there would be more competition, lower prices and the same geographical access.
In 1978, Congress passed the Airline Deregulation Act, which eliminated route and price regulation and ultimately disbanded the Civil Aeronautics Board altogether. At first, it seemed that the deregulation advocates had been right: New airlines like People Express entered the sector, offering rock-bottom prices on some routes. But unbridled competition soon led to destruction and reconsolidation. Airlines declared bankruptcy and merged; union wages were rolled back; small communities lost service; the flying experience got worse; big airport hubs became the norm.
One of the leading proponents of deregulation, Alfred Kahn, admitted a decade afterward that there were higher prices on some routes and a real danger of “monopolistic exploitation.” The Federal Aviation Administration still certifies airlines, adopts safety standards and manages the air traffic control system. But no agency today is responsible for regulating prices or route networks.
That same deregulatory ideology spread to other industries, such as trucking, maritime shipping, telecommunications and banking.[2] And it was often coupled with efforts not only to limit additional government investment but in some cases to roll back spending. The “starve the beast” approach eventually led to work force shortages and, ultimately, to last year’s DOGE cuts to government operations, including at the Federal Aviation Administration.
It is too early to know the exact reasons for the crash on Sunday at LaGuardia, but it appears that a lack of investment is at least partly to blame. Early reports note that the fire truck that collided with the plane did not have a transponder, and the two air traffic controllers on duty were busy managing a different, urgent issue when the plane landed.
When everything is working perfectly, it might not matter if the technology is up-to-date or if there are more controllers on hand. But when there is a crisis, technology and redundant staffing can make a big difference. We have seen tragically, yet again, that the decision not to invest can be fatal.
A shortage of air traffic controllers is one of several challenges the airline industry faces today. Air traffic control systems are in need of significant investment and modernization. Airlines are vulnerable to oil shocks — an issue that’s been widely known since the 1970s, but that hasn’t inspired enough innovation. Market concentration has created fortress hubs dominated by just one airline, which means fewer gates for smaller airlines, congested airspace, runways and terminals, and cascading cancellations across the country when bad weather strikes.
Some cities, like Cheyenne, Wyo., have been forced to guarantee airlines base-line revenue simply to get a minimal service. Other cities have lost flights or hubs, and with them, economic opportunity. Meanwhile, some politicians support more airline mergers to stave off bankruptcies, without ever asking why the industry always seems to move toward consolidation.
The good news is that this mess is not intractable. There is a way out. Politicians need to learn the lessons of hundreds of years of infrastructure policy and once again embrace the role of government in providing high-quality infrastructure. That means reviving regulation and making a systemic investment in the infrastructure for air travel with a coherent industrial policy.
Policymakers should commit to spending more on air traffic control, airport infrastructure and innovation. But an industrial policy without proper regulation will not be sufficient. Absent regulation, the benefits of scale incentivize airlines to consolidate operations in ever-bigger airport hubs.
Regulated competition would help ensure that small and midsize cities have more access to flights and it would reduce the downsides of a single airport getting hit with bad weather. And regulation is needed to resolve some of the things that make air travel the most miserable: ever-changing prices, junk fees and small seats.
During debates about airline regulation in the 1930s, the head of a major airline trade association, Col. Edward Gorrell, said that the path forward for airline policy should be the “traditional American way” of “providing a basic economic charter that promises the hope of stability and security, and orderly and intelligent growth under watchful governmental supervision.”
To fix air travel today, we should recommit ourselves to that ideal and embrace a regulatory and industrial policy that will once again make our air transportation system the envy of the world.
Ganesh Sitaraman is a professor of law at Vanderbilt University and the director of the Vanderbilt Policy Accelerator. He is the author of “Why Flying Is Miserable and How to Fix It.”
airline deregulation in 1978. ↩︎
Doesn't name Reagan or Jimmy Carter? ↩︎