More and More, Deregulation Won’t Fly

Sen. Robert C. Byrd of West Virginia, who also happens to be the Democratic leader of the Senate, told a presidential commission the other day that he voted for airline deregulation but now believes that it was a mistake. He said that, given the chance, he would vote--”twice if I could”--to bring back federal regulation.

Reregulation is not just around the corner. But more and more complaints are being heard about delayed flights, overbooking, mishandling of baggage and deteriorating safety in the air. Some experts see evidence that the lower fares brought about by deregulation will be very temporary.

The question of whether deregulation has adversely affected air safety will be among the issues addressed by the Presidential Commission on Aviation Safety in its report next April. As the caustic comment by Byrd suggests, Congress is already beginning to stir. The advisability of reimposing regulation clearly has entered the realm of respectable discussion.

Under the regulatory system that prevailed 10 years ago, the airlines could not establish new routes, abandon old ones, raise or lower fares without the permission of the Civil Aeronautics Board. Limited competition was the norm on major routes. Fares were inflexible. Would-be entrants into the airline business found it very difficult to obtain the required certification.

The 1978 Airline Deregulation Act did not diminish federal powers and responsibility in the safety realm, but substantially eliminated economic regulation.

The goal of deregulation, opposed at the time by most major airlines, was to engender more competition, thereby helping consumers from the standpoint of both service and ticket prices.

Last year the conservative Heritage Foundation and the liberally oriented Brookings Institution both issued reports saying that these goals had been substantially achieved.

According to their reports, deregulation has saved air travelers $6 billion a year and fares are 39% below what they would have been without deregulation. Last year 90% of all airline passengers flew at fare discounts averaging 61%. And there is no question that the bargain fares stimulateda huge upsurge in air travel.

Within recent months, however, it has become obvious that airline deregulation is not an unmitigated success story.

Those bargain fares are mostly on the long-distance, heavily traveled routes linking major air-travel centers. For anybody flying just a few hundred miles on a lightly traveled route, things are different.

Sen. Larry Pressler (R-S.D.) has charged that “it now costs more to fly 150 miles between two major cities in South Dakota than it does to fly 3,000 miles across the continent.” Byrd grumbles that he sees “cross-country fares at a fraction of the cost to fly into West Virginia.” Similar complaints have been voiced by Sen. Nancy Landon Kassebaum (R-Kan.) about the fare differential between flights into Kansas City and Wichita.

The experience of recent months suggests that from now on the trend will be toward higher ticket prices, both on the routes that feature cut-rate fares and those that don’t. Their evidence is disputed, but critics also charge that economic development in small towns is being retarded by the lack of adequate air service.

Air passengers, meanwhile, are discovering that all too often the flip side of cut-rate fares is lousy service.

Then there is the question of safety. In terms of actual fatalities the overall airline safety record shows no signs of deterioration. But the number of close calls has become unnerving.

As they look at all these elements on the negative side of the deregulation balance sheet, more and more critics see a common thread: the trend back toward monoply in the airline business.

Deregulation was supposed to enhance competition, not throttle it, and for several years there was indeed a competitive explosion as dozens of new airlines entered the field. Most of the newcomers are gone by now, however, and there is a decided move toward concentration by acquisition.

When deregulation came in 1978, the six largest carriers controlled 73% of the market; now they get 84% of the business.

The big operators effectively squeeze out new competition by controlling the available gates, by allegedly rigging the computers that they make available to travel agents to favor their own airlines, and by using their political influence to ward off air-terminal construction projects that would make room for new competitors.

TWA now accounts for 82% of the passengers emplaning at St. Louis. At Pittsburgh the figure for USAir is 80%. Northwest’s share of the business at Minneapolis is 76%. At 15 of the nation’s busiest airports, either half the business is already controlled by one carrier, or two carriers share more than 70%. If a passenger doesn’t like what he’s getting from the predominant airline, where is he going to take his business?

Under these conditions, it is not surprising that fares are going up and the quality of service is going down. At St. Louis, for example, the average ticket price in May was 33% higher than a year ago.

Meanwhile, there is a suspicion, hotly denied by the airlines, that deregulation and the resulting merger wave are encouraging shortcuts on safety.

Industry spokesmen argue that fares are leveling off, that the big airlines now in existence will begin competing in service and that, everything considered, things are hunky-dory. Maybe they are right. But if the proof isn’t forthcoming in the next few months, the logic of reregulation will become overwhelming.