Next for aviation deregulation: the infrastructure

On a serious note, folks: people do agree that even if you wanted to regulate the airlines it would be tough, and that probably you shouldn’t. That was pretty clear from a workshop that the Justice Department put on the other day. The agency’s Antitrust Division, the keen-eyed lawyers a and equation-happy economists who decide if airlines can merge or if they’re doing bad things like fixing fares or colluding or smoke_filled.jpgmeeting in smoke-filled rooms (left), etc.One Justice Department  economist, Rene Kamita, noted that the State of Hawaii had treed to regulate fares on local routes among the Islands but that the agency and congress had kept it from doing so, and meanwhile fares on the local routes had gone down and service had increased. It’s too easy to dismiss talk of airline reregulation as simple nonsense: the Obama administration-in-waiting isn’t just beholden to regulators like organized labor but is also tied in with the passenger rights movement, which some see as a stalking horse for reregulation. And Bob Crandall, the former American Airlines chief, has become a leading voice for “moderate price regulation.” One of the airline economists, Severin Borenstein, noted that airlines hadn’t been a particularly stable industry before deregulation and so you couldn’t really expect it to be so now.

 

Borenstein, who expert-testifies a lot and who teaches at Berkeley, said he thought the spotlight would shift to reregulation and deregulating of the aviation infrastructure, and, since he was about the only morning Midway_Airport_%28USGS%29.pngspeaker that we could understand, we had to agree. In the afternoon, two of the most articulate airline economists out there, Cliff Winston and Steve Morrison (of the Brookings Institution and Northeastern University, respectively), suggested that the problems that have arisen in recent year, airport congestion, airline over scheduling and the like suggest that an effective solution calls for a fundamental shift in airport policy.

Unfortunately, they say, publicly owned and managed airports are resistant to change, they note, but suggest that certain features of a privatized airport system could raise social welfare, although experiments are needed to provide hard evidence of the potential benefits. In other words, be good, Midway.

 

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