Essay: Northwest Clouds - 7/25/07

Back in the early 1980s, I had to fly somewhere nearly every week, sometimes more than once a week. I am not an aviation buff, but I never minded flying. The planes showed up pretty much on time. When a rare problem occurred, there were always other flights and other airlines to choose from.

Plus if you flew farther than to and from Toledo they fed you, and flying gave me a much-appreciated chance to read.

Now, I try to jump through hoops to avoid flying. Next month I am going to be in Illinois, Kansas and Missouri for a few days. Ten years ago, my wife and I might have flown there and rented a car.

This time, we both said, no way. We are driving. Detroit Metro’ s new McNamara terminal is nice, but not anyplace I want to spend two days dining on Cinnabons after my flight is canceled.

Besides, last time I flew they inexplicably let me keep my penknife. But they took away the plastic kindergarten scissors I use for cutting out newspaper articles.

Here’s what happened. The government stopped regulating the airlines in the early 1980s, thanks largely to the Airline Deregulation Act of 1978. Shortly afterwards, the government also stopped enforcing the anti-trust laws. The end of deregulation was supposed to mean more competition, with all the benefits that would bring.

It also was supposed to mean cheaper prices, especially for the most traveled routes. What we got instead is a sort of nightmare. I am constantly getting letters from people about some failed government program. See, they say, this proves “socialism doesn’t work.”

Well, airline deregulation would seem to show that capitalism doesn’t work, at least predatory capitalism.

Economist Arthur Leahy’s 1992 book Flying Blind: The Failure of Airline Deregulation, says it all. He demonstrates that all the basic assumptions of deregulation were false. Those promoting it argued that destructive competition was unlikely, and that those sacred market forces would keep prices in check.

Boy, were they wrong. What we got instead was a new world of highly destructive competition, as airlines were bought and sold by corporate raiders who didn’t care about anything but a quick buck.

Remember Eastern? PanAm? TWA? Republic? Leahy shows conclusively how deregulation has led to discriminatory and higher pricing, service deterioration, and planes that aren’t as safe.

And his book came out fifteen years ago! The trends he identified then have only gotten worse. Today, much of Detroit’s transportation economy is being held hostage to a highly unpopular airline that has a workforce and clientèle which seems to hate it.

Northwest also has great difficulty serving its basic routes, yet it wants approval for more flights to China. The airline has already filed once for bankruptcy. And no one can even imagine the economic impact on Detroit if it were to go out of business.

You know, I think we’ve given unbridled capitalism a pretty good try. So doctor - please call in the socialists.

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Comments

[Grant Klokeid]

Jack,
Your discussion concerning the airline industry missed a critical point that caused you to come to the wrong conclusion. Your conclusion was that the airline industry needs to be more socialized and let capitalistic. You made several good points about the difficulties we have to endure as a result of flying commercial airlines today.

The BIG obvious point you missed is how substantially air fares have dropped since deregulation. I can fly much cheaper today than 10 years ago. You probably did not consider this because a good chunk of your flying is being paid by someone else (e.g. employer).