Its certainly not about "protecting jobs" or being good for the industry as they might lead you to believe. Its not about a free market system or keeping airlines viable or profitable allowing them to pay their employees decent wages or staying out of BK (which ultimately causes more cost to the tax payer....but lets conveniently ignore that for now). Its about LOW TICKET PRICES TO THE CONSUMER. Its about getting re-elected. Its about allowing Jim Bob to fly all the way across the country for $99 or less. Labor and career aspirations for employees be damned!
I wont say that deregulation was necessarily the wrong choice but as an airline employee I certainly dont like the attitude of the guy behind it and the reasons he gloats about what he did (read below). The Feds say deregulation and a free market system are what the airline industry needed, yet today, after the fact, they always have their hand in the cookie jar trying to get what they can out of the deal, picking and choosing what they will continue to regulate. Whether its trying to force more fees on already strapped airlines to repair a severely broken ATC system, making airlines pay more to undo governments own lack of planning via "congestion pricing tactics", or making airlines shoulder the burden for increased security demands they always want someone else (the airlines and their employees) to cover their costs. Its kind of like the guy that shows up at a pizza party, eats ten pieces of pizza then doesn't want to throw his ten bucks in the kitty. On top of all this they then have the gall to screem bloody murder when airlines try to figure ways to raise ticket prices and change route structures and eek out a profit when oil reaches $100 barrel. A perfect example of wanting your cake and eating it too. I would say Oberstar is most assuredly on the same page as Kahn. Read on....
Wrath of Kahn kept airfares low
By Dan Reed, USA TODAY
ITHACA, N.Y. — At 89, Alfred Kahn doesn't fly as much as he used to. When he does, he can't help but smile and feel a sense of accomplishment when he sees how crowded the planes are these days.
"Sometimes, I even gloat a little bit," he admits with an impish grin. "Of course, unless I'm traveling with an associate, no one around me has any idea that I had anything to do with creating those circumstances."
TELL US: What do you think about the effects of airline deregulation?
More than anyone else, Kahn, a Cornell University economist who headed the old Civil Aeronautics Board under President Carter, gets credit for the dramatic lowering of fares over the past 30 years that has powered the explosion of demand for air travel.
Last year, a record 745 million passengers boarded flights in the USA. Most paid far less than they would have had Kahn not used his considerable wit, charm and communication skills to talk Congressinto letting the airlines, not the government, decide where and when they would fly and how much they would charge. The financial benefit to travelers? Staggering.
In 1978, when the Airline Deregulation Act passed, the average air traveler paid 8.3 cents per mile for a flight. In 2006, travelers paid just less than half that rate on an inflation-adjusted basis, according to the Air Transport Association, the industry's trade group.
Kahn estimates consumer savings at $5 billion to $10 billion a year. But Dorothy Robyn, an economist at The Brattle Group in Washington, and sometimes Kahn collaborator, says, "Fred's just being modest. Most estimates I've seen put it at closer to $20 billion."
Robyn says only the past two inflation-fighting Federal Reserve Board chairmen, Paul Volcker and Alan Greenspan, have had bigger impacts on Americans' wallets than Kahn, whose impact continues to be felt by far more than just airline passengers. Kahn has been a major player in the broader deregulation movement that persuaded Congress to give other industries such as trucking, telecommunications, railroads and financial services the freedom to set their own prices without government involvement.
Kahn, in a recent interview in his office near the Cornell campus, put it another way: "I'm a ham. I like the spotlight."
During the debate and in the early years of deregulation, most airline executives barked about the enormous upheaval in their business caused by "academics" like Kahn, using the word as a near-slur. Similarly, labor leaders opposed deregulation for the hundreds, even thousands, of jobs they predicted would be lost. Robyn says some concerns were well-founded. But those negative side effects were worth it to the deregulators, "whose goal from the start was … to make it so that air travel was no longer something only the elites could afford." Kahn says he'll gladly shoulder the blame for today's crowded conditions aboard commercial flights and for what he concedes in many cases is a dramatic reduction in service quality.
"People want both affordable and comfortable transportation," he says. "In the old days, you liked that empty middle seat next to you. But in the old days, you also were paying for that middle seat next to you. You just didn't know it."
He also pleads guilty, in part, to helping create some of the economic pressures that make airline profits small, when they exist at all, and industry jobs arguably tougher and less rewarding.
But he quickly adds, "Airlines were pretty unhealthy financially before deregulation, too. We didn't make things worse, and we opened up the way for new, discount carriers like Southwest (LUV) to succeed by bringing the fruits of deregulation to average people."
Regulation kept prices high and suppressed demand, he says. And labor, knowing that management could persuade the government to let them pass through any cost increases, "always took too large a share of the revenues for the airlines to ever be very profitable over any reasonable period of time."
In a speech in September to Washington, D.C.'s International Aviation Club, current Undersecretary of Transportation Jeff Shane, the department's top policy official, compared Kahn's victory in the deregulation debate with the bumble bee's improbable victory over the laws of aerodynamics to achieve flight.
Politically, Shane says, there was no way that Kahn, with the support of the Carter administration, should have succeeded. But they put together an unlikely coalition of liberals who were willing to go against the wishes of organized labor to bring low fares to the masses and conservatives willing to buck captains of industry and Wall Street to reduce government's active involvement in the economy.
Putting the arcane subject of deregulation "on the national policy agenda with such prominence that it simply had to be addressed is one of the most interesting stories in the annals of Congress," Shane says.
I wont say that deregulation was necessarily the wrong choice but as an airline employee I certainly dont like the attitude of the guy behind it and the reasons he gloats about what he did (read below). The Feds say deregulation and a free market system are what the airline industry needed, yet today, after the fact, they always have their hand in the cookie jar trying to get what they can out of the deal, picking and choosing what they will continue to regulate. Whether its trying to force more fees on already strapped airlines to repair a severely broken ATC system, making airlines pay more to undo governments own lack of planning via "congestion pricing tactics", or making airlines shoulder the burden for increased security demands they always want someone else (the airlines and their employees) to cover their costs. Its kind of like the guy that shows up at a pizza party, eats ten pieces of pizza then doesn't want to throw his ten bucks in the kitty. On top of all this they then have the gall to screem bloody murder when airlines try to figure ways to raise ticket prices and change route structures and eek out a profit when oil reaches $100 barrel. A perfect example of wanting your cake and eating it too. I would say Oberstar is most assuredly on the same page as Kahn. Read on....
Wrath of Kahn kept airfares low
By Dan Reed, USA TODAY
ITHACA, N.Y. — At 89, Alfred Kahn doesn't fly as much as he used to. When he does, he can't help but smile and feel a sense of accomplishment when he sees how crowded the planes are these days.
"Sometimes, I even gloat a little bit," he admits with an impish grin. "Of course, unless I'm traveling with an associate, no one around me has any idea that I had anything to do with creating those circumstances."
TELL US: What do you think about the effects of airline deregulation?
More than anyone else, Kahn, a Cornell University economist who headed the old Civil Aeronautics Board under President Carter, gets credit for the dramatic lowering of fares over the past 30 years that has powered the explosion of demand for air travel.
Last year, a record 745 million passengers boarded flights in the USA. Most paid far less than they would have had Kahn not used his considerable wit, charm and communication skills to talk Congressinto letting the airlines, not the government, decide where and when they would fly and how much they would charge. The financial benefit to travelers? Staggering.
In 1978, when the Airline Deregulation Act passed, the average air traveler paid 8.3 cents per mile for a flight. In 2006, travelers paid just less than half that rate on an inflation-adjusted basis, according to the Air Transport Association, the industry's trade group.
Kahn estimates consumer savings at $5 billion to $10 billion a year. But Dorothy Robyn, an economist at The Brattle Group in Washington, and sometimes Kahn collaborator, says, "Fred's just being modest. Most estimates I've seen put it at closer to $20 billion."
Robyn says only the past two inflation-fighting Federal Reserve Board chairmen, Paul Volcker and Alan Greenspan, have had bigger impacts on Americans' wallets than Kahn, whose impact continues to be felt by far more than just airline passengers. Kahn has been a major player in the broader deregulation movement that persuaded Congress to give other industries such as trucking, telecommunications, railroads and financial services the freedom to set their own prices without government involvement.
Kahn, in a recent interview in his office near the Cornell campus, put it another way: "I'm a ham. I like the spotlight."
During the debate and in the early years of deregulation, most airline executives barked about the enormous upheaval in their business caused by "academics" like Kahn, using the word as a near-slur. Similarly, labor leaders opposed deregulation for the hundreds, even thousands, of jobs they predicted would be lost. Robyn says some concerns were well-founded. But those negative side effects were worth it to the deregulators, "whose goal from the start was … to make it so that air travel was no longer something only the elites could afford." Kahn says he'll gladly shoulder the blame for today's crowded conditions aboard commercial flights and for what he concedes in many cases is a dramatic reduction in service quality.
"People want both affordable and comfortable transportation," he says. "In the old days, you liked that empty middle seat next to you. But in the old days, you also were paying for that middle seat next to you. You just didn't know it."
He also pleads guilty, in part, to helping create some of the economic pressures that make airline profits small, when they exist at all, and industry jobs arguably tougher and less rewarding.
But he quickly adds, "Airlines were pretty unhealthy financially before deregulation, too. We didn't make things worse, and we opened up the way for new, discount carriers like Southwest (LUV) to succeed by bringing the fruits of deregulation to average people."
Regulation kept prices high and suppressed demand, he says. And labor, knowing that management could persuade the government to let them pass through any cost increases, "always took too large a share of the revenues for the airlines to ever be very profitable over any reasonable period of time."
In a speech in September to Washington, D.C.'s International Aviation Club, current Undersecretary of Transportation Jeff Shane, the department's top policy official, compared Kahn's victory in the deregulation debate with the bumble bee's improbable victory over the laws of aerodynamics to achieve flight.
Politically, Shane says, there was no way that Kahn, with the support of the Carter administration, should have succeeded. But they put together an unlikely coalition of liberals who were willing to go against the wishes of organized labor to bring low fares to the masses and conservatives willing to buck captains of industry and Wall Street to reduce government's active involvement in the economy.
Putting the arcane subject of deregulation "on the national policy agenda with such prominence that it simply had to be addressed is one of the most interesting stories in the annals of Congress," Shane says.
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