Congress to consider airline re-regulation?
- Latest News
- Friday, 18 June 2010
Representatives James Oberstar (chairman of the House Transportation and Infrastructure Committee) and Jerry Costello (chairman of the panel's aviation subcommittee) say the deal has potential downsides for consumers and airline workers.
Deregulation has long been credited with making airline travel affordable for the average American, but Oberstar says the introduction of ancillary fees indicates consumers are no longer benefiting from the system.
He said he believes there's support in the House for re-regulation.
"(People in the House) keep asking me: 'When are we going to re-regulate the airlines?'" Oberstar said.
The legislation would re-regulate airline pricing and re-establish a government gatekeeper similar to the old Civil Aeronautics Board prior to deregulation in 1978.
The Board set standards and decided on a case-by-case basis which companies should be granted permission to fly passengers.
The ceos of United and Continental recently said low-cost carriers who drive prices artificially low and then go bankrupt have weakened the airline industry.
"The status quo for this industry is unacceptable," United's Glenn Tilton reportedly said.
Those with long memories will remember that prior to deregulation in the US, fares were high because any wage increases for airline staff were simply added to ticket prices and there were relatively few airlines in the air.
With deregulation, some 119 new airlines started up, but by the 1990s, almost all of them had failed, leaving the skies to the old 'established' airlines.
One reason for the failure of many of the start-ups was that the government failed to deregulate slots and gates, meaning that the new entrants were unable to compete with peak period flights on key business routes because the established airlines controlled takeoff and landing time slots and terminal gates.
Another reason was that the then-largest established carriers - including Delta, Northwest, United, Continental and American - owned the GDS computer booking systems and were able to display their own flights first on travel agents' screens. As around 45 per cent of all agents booked passengers from flights on the first screen, the new entrant airlines' flights were rarely made known to intending passengers. - Jack Handley
