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Joined: Wed Jul 04, 2001 12:30 am

Passenger Benefits From Re-regulation

Tue Feb 26, 2002 9:43 am


I have a project for school. I just want to know what were the benefits for passengers when the airlines were regulated? And if the airlines were to ever be re-regulated, what would be the benefits? Thanks in advance

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Joined: Fri May 05, 2000 2:08 am

RE: Passenger Benefits From Re-regulation

Tue Feb 26, 2002 11:18 am

Benefits: Passengers are protected; they get refundable tickets, scheduled service to many destinations that a free market would abandon or serve with lesser frequency, and they generally enjoy peace of mind about things such as the airline covering weather delays and MX issues.

Costs: They pay for all of that in higher ticket prices. Also the regulated system provides high barriers to entry, giving airlines monopoly pricing power.

Considering the considerable drop in ticket prices the past few years, the value of de-regulation (and the costs of re-regulation) are manifest.

Why do you think airlines should be re-regulated?
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RE: Passenger Benefits From Re-regulation

Tue Feb 26, 2002 11:20 am

Regulation was started in the immed WW2 post-war period. The only benefit was consistency of service to smaller markets that otherwise would not have supported service (and hence was subsidized by all passengers). The many drawbacks of regulation included inefficient airlines, high costs, a lack of competition.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
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Joined: Thu Mar 30, 2000 2:20 pm

RE: Passenger Benefits From Re-regulation

Tue Feb 26, 2002 11:44 am

Depends on what you mean by re-regulation. If you mean something resembling the CAB, that probably won't happen. What might be more plausable would be enforcement of consumer protection laws already on the books but often ignored.

Antitrust immunity granted airline alliances is a good example. I don't think it legal that an agency of the Federal Government can selectively exempt either people or corporations from laws enacted by Congress (in this case the Sherman antitrust act). In any case, one step in the right direction would be for the Federal Government to scrap airline alliances all together. They are little more than collusion, and codeshares are a subterfuge and are a violation of Federal antitrust laws.

Another might be imposing limits on traffic out of congested airports such as LGA, ORD, and ATL, where the number of slots cannot exceed the number of takeoffs and landings the airport is able to handle. If, for example ORD can only handle 25 takeoffs and landings in a 15 minute period, that is all the flights that should be allowed to depart.

Air Passenger's bill of rights legislation is little more than a public relations exercise that will ultimately mean little. The Federal Government cannot legislate good customer service; the airlines have to wake up to that fact on their own. One way to do this might be to liberalize air travel so that foreign airlines will have rights to fly passengers within the US. The added competition might help raise the customer servicce bar.

As for beneifts, I think there would be less congestion for one thing meaning on-time performance would undoubtedly improve, and the number of complaints would probably drop. There would be real choice among carriers and consumers would know what they are getting when they buy a ticket. They buy a ticket on KLM, they know they are flying KLM, and not a NW codeshare.

That's all I can think of so far... Does this help?

Charles, SJ
The customer isn't a moron, she is your wife -David Ogilvy

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