Remembering Alfred Kahn and deregulation

southwest-airlines-b737-3h4.jpg.500x400.jpgMuch of the aviation news we cover and the airlines and fares you fly would not be possible without the work of Alfred Kahn, who died Monday at the age of 93.

Appropriately referred to as the “father of deregulation” for aviation, Kahn as chair of the now-defunct Civil Aeronautics Board oversaw the dismantling of a system that controlled which airlines could fly where, and for how much. That occurred on 24 October 1978 with the passing of the Airline Deregulation Act.

Deregulation enabled existing airlines to grow and new airlines to come into the scene. Low-cost airlines in particular benefited, leading some obituaries to credit Kahn–for better or worse–as giving us cheap flights.

Here’s a look back through the Flightglobal archive at deregulation and Kahn’s CAB tenure.

Challenges with bureaucracy, hopes for low fares

In January 1978, we wrote an article about Kahn’s first six months as chair of the CAB, saying his “attitude to his job is probably best summed up by that old US Army Air Force expression: ‘The difficult we do immediately. The impossible takes a little longer.’”

Kahn spoke about his displeasure for the Bermuda II bilateral agreement between the UK and US, signed in 1972 and remaining in force (with modifications) until an open skies agreement in 2008, and how he was trying to exert greater control over international aviation, albeit to the displeasure of the Transportation Department. His seemingly roguish moves would prove to be nothing compared to deregulation.

Despite the challenges he was facing, Kahn was upbeat about the future he was seeing. He told us he was “delighted” Freddie Laker’s Skytrain filed to serve Los Angeles, saying standby and budget fares “give low-fare benefits and fill empty seats, meaning cost savings are possible and therefore saving scheduled service”, which would produce “hundreds of millions of dollars of benefits”.

Kahn on “merger fever”

In August 1978 we wrote that “merger fever” had struck the US: Texas International was trying to take over National Airlines, North Central and Southern looked to merge, and Continental and Western were in merger negotiation. Kahn’s response was, “It’s an epidemic, now don’t mis-quote me, I didn’t say it was a disease.” Kahn was not as strong an advocate for mergers and largely left merger decisions to his successor.

northwest-airlines-boeing-747-251b.jpg.500x400.jpgNorthwest sees benefit from Kahn

Some airlines were warming up to Kahn’s fair game approach, with Northwest Airlines saying in February 1978 it might benefit under a Kahn-led CAB as previously the airline’s efficiency was not being rewarded with new international flights; Kahn was inclined to not protect airlines whose costs were higher.

Envisioning UK-US open skies

Kahn was not pleased with the Bermuda II agreement, calling it “restrictionist”, but said low-fare progress between the US and UK was going “moderately well”. His long-term goal was to see more airlines operate between the two countries, but that vision would not be realised until three decades later.

On the subject of deregulation, Kahn remarked, “with the President on our side we shall be able to open up the US market quite quickly…I can’t say how long deregulation will take, but in a year’s time we should have progressed far enough to say that US domestic markets are opened.”

“Bribing” Israel for low fares

So committed to low fares was Kahn that he remarked how the US “bribed” Israel into offering lower fares in exchange for El Al gaining access to four additional US points.

Death sentence for CAB

The passing of the Deregulation Act was a “death sentence on Civil Aeronautics Board”, we wrote. Under the historic measure the CAB’s authority would gradually end, at which point “US domestic air transport will then become a virtually free market. Prices will be uncontrolled, and carriers will be able to enter and leave markets at will. New carriers will only have to prove

their fitness and ability to offer service in order to compete with the established airlines.”

The Deregulation Act was the first major dismantling of a US government body since 1935.

Deregulation passed, moving on from CAB

Days after passing the landmark bill, Kahn resigned as chairman of the CAB to head up President Carter’s anti-inflation programme. We concisely described Kahn’s 15 months at the CAB as “brief but eventful”. The CAB would be disbanded in 1985.

united-airlines-boeing-777.jpg.500x400.jpgMixed feelings for deregulation

Former Northwest Orient chairman Joseph Lapensky said at a 1985 conference in London, “I do not carry the candle for deregulation in this part of the world.”

Lapensky said airlines were too ambitious, citing the 120 airlines that went bust between 1980 and 1984.

He also took offence with the rise of “mega-carriers” like American Airlines and United Airlines. Speaking of United in the deregulated era, Lapensky remarked “Now this 900lb gorilla can sit anywhere it wants.”

A decade on and still supporting deregulation

We reported in 1987 of Kahn’s testimony to the Senate Commerce Committee, in which he said that the massive expansion in air travel had “given rise to a number of problems, notably congestion, delay, mistreatment of customers and uncertainty about safety”.

Kahn attributed these problems primarily due to the government’s failure to fulfill its responsibilities. He said they “cried out for correction” by Congress, but added that the result “should not be a return to the old regime of protectionist, anti-competitive regulation, but for the Government to do more vigorously and effectively what it should never have stopped doing”.

“My business is not in prediction”

At a September 2008 address to Airport Council International, Kahn made the above remark about the government being unable to absorb oil costing $150 a barrel. But his quote was also in context for his reflection on what, we wrote, deregulation brought: “increased air traffic has led to congestion, which has led to delays and unhappy flyers and that has led to calls for government reregulation.”

But on the upside, Kahn said, “The industry in the last 30 years gave the public something it had not received before: high quality, space, and low cost. It catered to a variety of demands and abilities today so that we had an enormous spread of fares.”

So which airline will be the first to name an aircraft after Kahn?

Photo credits (and yes I know they’re all from the wrong era): AirSpace user Global Ranger, coalburner, and apgphoto.

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