Was the deregulation of airlines good for consumers?

[Wakie]

So what do you think?  Was the deregulation of airlines a good thing or a bad thing?  Has it really resulted in lower prices and better service?  Here's a column (which I tend to agree with) which doesn't think so ....

http://www.usatoday.com/travel/columnist/brancatelli/2007-07-27-airline-rights-Rule-240-myth_N.htm?csp=34

[Small Business Owner of Any Repute]

Better service, no.  It's declined significantly over the years as the airline industry has become increasingly price concious—and price squeezed—because of skyrocketing costs.  You don't get as many perks anymore, if you're lucky to get any.

Better prices, however, yes.  It may not be a direct result of deregulation so much as it is a function of the internet (and being able to cut out the travel agent as middleman), but in my experience ticket prices have become more affordable.  The playing field has leveled to the benefit of the consumer.  Without deregulation and the internet both, I don't know if that'd be possible.

[Colin]

It has resulted in better prices for the consumer which, I'm sorry to say it, is the be all and end all of all relations between the business and the consumer. Service has mostly gone down because those low fares now allow more people to fly than in the days when service was regulated; causing more flight delays, new ways to cram people on airplanes, and a constant struggle to keep up with demand. Overall though flying is as cheap as it is because of the deregulation of the industry. Southwest, JetBlue, USA3000, and Sun Country, would never have been allowed to exist and the cheap fares they provide to consumers would, in my mind, make up for lack of service, this goes for major carriers as well.

With deregulation, as well, you could see some sort of backlash to the lack in service were you begin to fly an airline with slightly higher prices but better quality of service. In the market today if there was sufficient demand for such a service you would see it flying, it just seems people care more about low-cost than good service.

[Wakie]

See I would argue against the deregulation of the airlines.  I tend to view any decline in ticket prices as being a function of the internet allowing consumers to rapidly search for optimal rates based on travel times (not based on carrier).  For business travelers the rates have, if anything, actually increased (the business traveler being one who has little control over when he will fly).

The major problem comes from the fact that in order to travel to or from certain cities a traveler only has 1 choice.  Going in or out of Atlanta?  You're on Delta.  Going in or out of Dallas?  American.  Washington-Dulles is overrun by United.  I don't know how it is now, but a few years ago if you wanted to go between Pittsburgh and Philadelphia your ONLY choice was US Air and it was more expensive than flying from Pittsburgh to Tampa.  The problem is that because these airlines enjoy relatively monopolistic control on certain airports and routes, they can literally charge virtually any price AND they can abuse customers with an attitude of "where else are you going to turn".

At least during regulation the service was high to match the price.  Under deregulation the service is low and price is still relatively high.l

The only way for deregulation to truly work for the airline industry is for the monopolistic control of routes to be broken.

[True Federalist (진정한 연방 주의자)]

Generally been a good idea, as persons who are interested in service could in theory still be catered to if they are willing to pay the price.  There does need to be a way to break up airport slot monopolies.  The easiest way would be for them not to be automatically renewed but instead put up for competitive bidding each year.  The alternative would be to cap the number of slots a carrier could hold.

[Person Man]

Not really....but at least things are moving along now. I applaud the new dreamliner, with less fuel needed, seat tickets should be lower, or at least climb slower.

[Colin]

See I would argue against the deregulation of the airlines.  I tend to view any decline in ticket prices as being a function of the internet allowing consumers to rapidly search for optimal rates based on travel times (not based on carrier).  For business travelers the rates have, if anything, actually increased (the business traveler being one who has little control over when he will fly).

No actually that's not at all the reason. Before 1978, I believe it was, the US government actively set the price on routes and allowed very little lee way for private airlines to set their own price. What this led to was that many routes, even major routes, were monopolies owned by one airline because the high ticket price reduced demand so much that another airline could not be profitable on the route. Add into that the high cost of getting clearance from the government to start a new route and you basically have the government both propping up monopolies and setting their prices.

The advent of the low-cost carrier and the competition between fares began long before the internet was ever a household item. I would point you towards the history of the, now defunct, People Express airline and South West Airlines both were started and prospered before the advent of internet travel booking.

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Well it has become much better now. While a few years ago it was a USAir monopoly between Pittsburgh and Philadelphia it is now a route serviced by both Southwest and USAir leading to lower prices for all flights on this route compared to a few years ago. JetBlue has begun to crush Delta's monopoly on domestic flights out of New York-JFK and vacation airlines like USA3000, Sun Country, and Frontier have reduced prices on high volume routes to places like Florida, Mexico, and the Southwest. I would argue that the monopolies that are left are either monopolies of scale, sorry to say this but you're never going to have 5 different airlines competing on a route between Pittsburgh and Rochester, or are hold overs from the days of regulation when routes were held by a single airline and competition on those routes was made non-existant by government intervention.

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I really don't know if service was higher as I never have flown on an airline pre-deregulation. I doubt we were talking Singapore Airlines level anyway.

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Well that keeps happening. SouthWest and JetBlue have done quite well in tearing down former monopolies in places like New York-JFK, Philadelphia and Houston. Also smaller airports are becoming increasingly popular, airports like Chicago Midway, New York-LaGuardia or Baltimore-Washington International, which leads to further amounts of competition because of a higher number of gates available giving more opportunities to new airlines and low-cost carriers.

Overall deregulation hasn't been all rainbows and sunshine but, in comparison to the high costs of travel before, it has lowered costs and created a competitive marketplace in aviation.

[??????????]

Wakie, regulation has been a dream for the rail industry, hasn't it? I mean Amtrak has been propped up by the government for 30 years and in that time has never made a profit.

[??????????]

But to be fair, I bet Southwest was happy the show 'Airline' was canceled. It totally made their service look like total crap, which it is.

[Person Man]

There you go...

[Wakie]

Wakie, regulation has been a dream for the rail industry, hasn't it? I mean Amtrak has been propped up by the government for 30 years and in that time has never made a profit.

I can't speak to the rail industry as I don't know much about it.  But deregulation/regualtion success or failure in one industry doesn't translate to success/failure in EVERY industry.

From my perspective the failure of deregulation in the airlines is mainly caused by the fact that the airlines were deregulated but the airports themselves were not (allowing for monopolistic controls of various routes).