Thursday, June 17, 2010

Talk of 'Re-Regulating' Airline Industry

In the House of Representatives, there's been talk this week about re-regulating the airline industry if, as expected, the Justice Department ok's the merger of United and Continental airlines.

At a House hearing yesterday, James Oberstar, chairman of the Transportation and Infrastructure Committee, and Jerry Costello, chairman of the aviation subcommittee, broached the subject of some form of federal re-regulation.

There will be a lot of talk about this in coming months. One thing to keep solidly in mind, as air travelers: When the airline industry was deregulated in 1978, fares dropped sharply as new competition poured in.

Under regulation, airfares and routes were generally set and apportioned by the government among a small number of big carriers. After re-regulation came the free-for-all that we still see today.

Before de-regulation, airlines could make a (guaranteed) profit even running planes at 60 percent full. Air travel was profitable and way more pleasant -- for the airlines and for those fliers who could afford it.

So the airline industry, while it usually screams bloody murder about any federal intervention, is not uniformly opposed to some kinds of re-regulation.

Stay tuned.


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