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Posts Tagged ‘deregulation’

The collapse of the real estate markets, the banking industry, and the automobile industry over the past year has been the subject of news headlines almost every day. However, there is an other segment of the economy that has received scant attention, yet there is another industry that has also fallen to its knees: the airline industry.  Today, stocks for airlines like United and American are selling at 1/10 th of their value only a year ago. Yet, our government seems unconcerned.  In the world of aviation the unregulated, free market economics of Reagan and Bush still reign.  The result is that our airlines are barely able to survive and, for many passengers today, flying is merely something to be endured.

It doesn’t have to be this way; it wasn’t always this way.  Before the era of the great Reagan economical errors the airline industry in the U.S. was heavily regulated. Airfares and air routes were controlled by the government.  The drawback of the old system was that the cost of an airline ticket was relatively high compared to today.  However, the advantage for passengers was that there was actually legroom and food on airplanes.  A transcontinental flight was a comfortable journey with the airline providing good meals, blankets, pillows, magazines, decks of playing cards, postcards to be filled out, complimentary ink pens, – anything you could possibly want during your flight was provided, even in economy class.  Furthermore, the airlines actually made money because they were not faced with cutthroat competition.

Some airlines, like Pan American, were only allowed to fly international passengers while others only flew domestic passengers.  During the pre-Reagan years we had three major commercial airplane manufacturers in America: Boeing, Douglas, and Lockheed; now there is only Boeing and Boeing has now fallen behind Europe’s government supported Airbus and the world’s premier passenger airplane maker.  In the pre-Reagan years an airline pilot was paid a salary commensurate with his abilities and his responsibilities, which were significant  – he literally held the lives and safety of his passengers in his hands.  Today, only a few pilots – the most senior at the largest airlines – still make six figure salaries. Young pilots,  the first officers who take turns with the captains flying each leg of a flight, find that their starting pay, even at the largest of the U.S. airlines, is comparable to the starting pay for a barista at Starbucks or a cashier at Wal-Mart.  Isn’t that just a little scary?

One need only to look at the record of the past thirty years to see that aviation in the U.S. is in a death spiral. The number of airlines that have vanished since deregulation is large. Gone are Pan Am, Eastern, Northeast, Braniff, Northwest Orient, America West, Mohawk, TWA, PSA, Air Florida, Air New England, Aloha Airlines, Mid Pacific Air, Mississippi Valley, National, New York Airways, North Central, Overseas National Airways, Ozark, Piedmont, Ransome, Reeve Aleutian, Republic, Southern, Transamerica, Western Airlines, and Wright Airlines.  There are actually a lot more. Too many to list here; for a more complete list check out wikipedia.

Clearly, operating an airline is  risky business undertaking.  It was risky even during the years of government regulation, but one has only to look at the financial condition of our major airlines to realize that the industry, as a whole, is facing a dire situation. Certainly, the plight of the airlines was severely compounded from the 9/11 attacks when a lot of people stopped flying.  A lot of rich executives went out and bought private corporate jets to avoid the possibility of a hijacking.  The price of fuel has skyrocketed.  Competing start-up airlines have forced the existing airlines to operate on a dime – to the benefit of no one.  It probably won’t be long before our airlines follow in the footsteps of Ireland’s Ryanair and start charging passengers to use the onboard toilets.

Enough.  The time has come to re-institute adult supervision for the airline industry. The alternative is the collapse of airline transportation in the U.S.  We are the only country in the world to all such no-holds-barred, free market capitalism for our airlines.  The result is that, by comparison, our airlines provide shoddy service in terms of passenger comfort, baggage handling, and on time performance.  Check out the 2009 World Airline Awards and compare any American airline with Singapore Airlines, Asiana Airlines, or British Airways. The only award given to any U.S. airline was given to Continental Airlines. Their award? Best airline in North America.  How far the U.S. airline industry has fallen!

A question we should all ask ourselves is this: are we also playing Russian roulette with airline safety in the U.S.?  Remember the fiasco about the cracks in Southwest Airlines’ planes? The U.S. government has gone too far down the path of no rules capitalism, a path that has led to the collapse of the real estate market, the U.S. banking industry, and the world economy. It also appears to be leading to the collapse of the U.S. airline industry in the near future. Now is the time for the government to reassert itself in U.S. aviation.  I know the government has its hands full at the Treasury but the FAA seems to be just sitting on their hands. My guess is they have plenty of free time; all they need is for President Obama to give them the word.  After all, we can’t all fly on Air Force One, can we?

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