Aero-politics: October 2008 Archives

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 meeting 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.

Okay, this is not something we do every day but today we will because it is the thirtieth anniversary of airline deregulation. The debate (let's re-regulate the airlines) is pretty much over because it would (choose your cliché) be hard to unscramble the omelette, put the toothpaste back in the tube, or undo the underpinnings of a massive system. (Choose as many as you'd like.) But with Barack Obama likely heading to the White House in January, in part because he has vowed a thorough overhaul of financial regulation, drug regulation, and housing regulation, we will refer loyal Left Fielders to a post by our friend Bill Swelbar. His Swelblog takes a good look at what happened and how it happened and where we're going and things like that. Bill is always worth reading, even if you agree with him on most everything.

You knew it was bad, but it seems to be getting worse. The number of domestic US flights is set to fall by almost 11% and capacity by 9% in the fourth quarter of 2008 compared to a year ago, according to OAG. OAG, which used to be the Official Airline Guide, which just revised its August estimate. The domestic market will account for 21.4 million of the cutback in available seats, or 46% of the global decline, and a staggering 59% of the global drop in frequencies with 265,000 fewer flights.