When flying changed: 1978

[trof]

One of the Loungers also asked me to lay this one on you in GD.
Kind of a 'what happened?' follow on to my "Pan Am" memories post.

Airline deregulation in the United States

"Although federal regulation of the airline industry can be traced to the Air Mail Act of 1925 and the Air Commerce Act of 1926, serious economic regulation of commercial aviation began with passage of the Civil Aeronautics Act of 1938. This Act created the Civil Aeronautics Authority, which became the Civil Aeronautics Board (CAB), and gave the CAB the power to regulate airline routes, control entry to and exit from the market, and mandate service rates. Airline safety regulation would come much later with passage of the Federal Aviation Act of 1958, which created the Federal Aviation Administration."
http://en.wikipedia.org/wiki/Airline_deregulation#Airli...

So, prior to 1978 the CAB dictated where, when, and how often airlines could fly routes. And how much they could charge.

This left just one way for airlines to compete for customers.
You guessed it...CUSTOMER SERVICE!
And the competition was hot and heavy to provide the best food and drink and creature comforts, anything to lure more passengers.

That all changed with the Deregulation Act of 1978.

"The Airline Deregulation Act (Pub.L. 95-504) is a United States federal law signed into law on October 24, 1978. The main purpose of the act was to remove government control over fares, routes and market entry (of new airlines) from commercial aviation. The Civil Aeronautics Board's powers of regulation were to be phased out, eventually allowing passengers to be exposed to market forces in the airline industry."
http://en.wikipedia.org/wiki/Airline_Deregulation_Act

"Exposure to competition led to heavy losses and conflicts with labor unions for a number of carriers. Between 1978 and mid-2001, nine major carriers (including Eastern, Midway, Braniff, Pan Am, Continental, America West Airlines, and TWA) and more than 100 smaller airlines went bankrupt or were liquidated—including most of the dozens of new airlines founded in deregulation's aftermath.

In 2011, Supreme Court Justice Stephen Breyer (who worked with Senator Ted Kennedy on airline deregulation in the 1970s) wrote:

What does the industry's history tell us? Was this effort worthwhile? Certainly it shows that every major reform brings about new, sometimes unforeseen, problems. No one foresaw the industry's spectacular growth, with the number of air passengers increasing from 207.5 million in 1974 to 721.1 million last year. As a result, no one foresaw the extent to which new bottlenecks would develop: a flight-choked Northeast corridor, overcrowded airports, delays, and terrorist risks consequently making air travel increasingly difficult. Nor did anyone foresee the extent to which change might unfairly harm workers in the industry. Still, fares have come down. Airline revenue per passenger mile has declined from an inflation-adjusted 33.3 cents in 1974, to 13 cents in the first half of 2010. In 1974 the cheapest round-trip New York-Los Angeles flight (in inflation-adjusted dollars) that regulators would allow: $1,442. Today one can fly that same route for $268. That is why the number of travelers has gone way up. So we sit in crowded planes, munch potato chips, flare up when the loudspeaker announces yet another flight delay. But how many now will vote to go back to the "good old days" of paying high, regulated prices for better service? Even among business travelers, who wants to pay "full fare for the briefcase?"

[bluestateguy]

1. The quality of customer service has gotten worse in the last 10 years

Jam packed flights, no more food on planes (save for gas station quality "snacks" that you have to pay for), rude flight attendants, too little legroom, and just generally more idiots passengers on planes today than was the case in the past.

[Blue_Tires]

2. I definitely agree about the legroom...

If I ever see the inside of an MD90 or CRJ again it'll be too soon (who am I kidding? that's all I ever get to travel on anymore!):grr:

[GKirk]

3. I can live without the snacks...

...because I can bring my own food on the plane or just go without; after all most flights are just a couple of hours. I've never seen a rude flight attendant or seen a rude passenger (other than a child kicking my seatback). Also I expect the plane to be 'jam packed' that's how they make money. The too little legroom is a problem but I can deal with it. One more thing I've never had an airline lose my luggage.

[dana_b]

9. as a former "rude" flight attendant

I agree with most of your post but I have to say that there has been a LOT of idiot passengers for a long time however, I don't think it is entirely their fault. Flying is so stressful now. It has been for a long time but especially now with the TSA regulations. I am so thankful that I don't have small children now. And as you mentioned the leg room has decreased, the flight staff don't like us to get up and move around (if you can find a spot to do so!!)and the food options are bad. The "fun" of flying is gone. Even in the 80s and 90s we could give toys to the kids, let them see the captain and the cockpit, we could talk to people who were not used to flying or maybe it was there first time flying but now... it's more like a big airborne Greyhound bus - with less leg room.

[nichomachus]

4. There are some areas where unfettered competition is bad

This was one of them.

First, it wasn't really a competitive field, as there are only so many landing slots and so many gates at airports. So, the market can't accommodate all comers.

Then, the field was flooded by fly-by-night (pun intended) airlines that were undercapitalized and had a poor business model. They would undercut the big guys on price and the big guys would either have to match or to suffer a loss of customers. Then, after the big guys had taken a loss, the little guy would just disappear.

The fare structure today is just insane.

The fact that you can't give or sell your ticket to someone else is a pain, but really works in your favor. Otherwise, agencies with buckets of cash would just buy up all the tickets as soon as they could and then you'd have to buy the tickets from them at whatever price they wanted. They could really hold you up.

[FreeJoe]

39. While I agree...

While I agree that our current state of airline regulation is far, far from perfect, it's much better than it was before deregulation. As much as air travel sucks, it is much cheaper. When I was a kid, we never flew anywhere except when my father was tranfered and the company picked up the tab. Now airfare is cheap enough for my kids to be in frequent flyer programs.

Look at it another way. When airfare costs go up, more people drive. Driving is more dangerous. Airline regulation, by lowering prices, encouraged more people to fly. That undoubtedly resulted in lots of lives being saved.

I remember a related story about how airlines tried to get a regulation banning lap children (kid's under 2 flying on their parent's laps). They argued that it was a safety thing because kids not in their own seats were more at risk in a hard landing or crash. That's true. It's also true that their interest was in selling those extra seats. Fortunately, the FAA wasn't stupid. They ran models showing how many families would opt to drive rather than fly if they had to pay for an extra seat. The models showed that far more children would be killed in car accidents than saved in plane crashes under the proprosed rules.

[Major Hogwash]

5. Excellent article and you should be commended for exposing Kennedy's dereg desires of the airlines

The same way he dismantled the trucking regulations in the 1960s.
Sometimes government regulations provide for better than expected service.
But, now in a corporate "hostile takeover" world, we are left with crappy service provided by 4 major carriers who could care less if we like their level of service or not.

[Gormy Cuss]

6. I think most would vote for a happy medium: 20-30% higher minimum fares, more leg room, free bag chk

for one bag. I know of no one trapped in the long line for coach who LIKES to fly these days.

[The Velveteen Ocelot]

7. You are right on all counts.

Now, years after deregulation, airlines can compete only on fares, so they keep them as low as possible. An airline's fixed costs are very high: airplanes are expensive to purchase/lease and maintain. Fuel has become much more expensive, and even though airlines hedge, they can't really control this cost. There are airport fees to pay. Pilots and flight attendants must be trained (there are required FAA training standards that must be met). The only variable cost is that of labor -- one of the reasons for the deterioration in customer service is that staffing is kept as lean as possible.

So maybe when you go to a ticket counter or a gate for assistance there's nobody there because the employees have to cover multiple stations. Maybe when your airplane arrives you have to wait to deplane because there's nobody to marshal it to the gate or operate the jetway - for the same reasons. To compete on fare prices airlines have had to cut back in the few areas they can: amenities, employee numbers and employee wages.

Your cheap ticket was purchased for you by the employees of the airline.

[trof]

8. Very good analysis of why were're where we are.

[trof]

10. What deregulation did for me.

It cost me about six years of my career.
Three furloughs...layoffs.

We were union, Airline Pilots Association (ALPA), and hired and laid off by seniority.
Last to be hired were the first to go when the economy dumped, or when deregulation hit us.
That's a fair enough system, but it can sure fuck up your life.
When your airline needed more pilots, you were called back again, in seniority.

I sure learned to be a survivor and NOT bank on the future.

[Curmudgeoness]

16. Most of those fees are now being charged after the "base price".

If you have purchased a ticket lately, you will find that at least $50 will be added to that base price in all sorts of fees. And that doesn't include the baggage fees.

[Recursion]

11. Flights were also significantly more expensive in real terms and less frequent

It's a trade-off.

[bbinacan]

12. And prices came down a ton.

What used to be a pleasant trip, has now become the equivalent of a Greyhound Bus or Amtrak. It's a trade off.

[underpants]

18. Yes the airlines were the only industry that was de-regulated and actually decreased prices

telephone, cable, healthcare, you name in every other deregulated industry "competition" increased prices. :eyes:

Yes it is like taking a bus now. The business schools have clearly failed us (and I went to a business school).

[bbinacan]

21. But wouldn't you agree

that those industries are providing a lot more now? Cable now offers DVR, HDTV, 3D etc. I'd have to look at what one paid for cable in 1970, adjust for inflation, and see what it would be today. I doubt your premise is correct.

[underpants]

22. No they aren't offering more compared to what they pay for it

there are offshoot channels and increases in technology but they didn't pay for the tech and they overcharge for the channel increases.

Healthcare - 60% of R&D on new drugs is done by NIH. A large portion of the other is done at public universities. They include marketing (TV ads) and executive pay in their R&D costs.

[bbinacan]

28. Please read the FULL comment

before you reply. Thanks.

[starroute]

25. When I first got cable in 1985, it was $7.50 a month

Now I'm paying $65 a month for satellite -- but cable would be the same or more.

Granted, there are more channels, but there doesn't seem to be anything more that is actually worth watching. Back in those days, CNN actually had news and MTV actually had music.

Some competition might actually help. I don't know if it's the same everywhere, but around here the cable companies divide up the territory -- presumably because they own the cables -- and you don't get to choose.

[Initech]

13. Deregulated capitalism is going to kill us all.

[avaistheone1]

14. Deregulation has been a nightmare for Americans in virtually every industry it has touched.

[Brigid]

15. At the end of the episode Sunday night . . .

They showed a little girl watching in awe as a line of Pan Am stewardesses walked by. The implication, of course, was that she girl now wanted to be one of them when she grew up. But by that time, deregulation had struck, as did the terrorist threat; and her experience as a flight attendant would have been quite different from that of the glamorous women she saw that day.

[Curmudgeoness]

17. One of my biggest gripes is the wide gap in fares.

Was this a result of deregulation? I just hate that some people have paid $100 to sit beside someone who has paid $400. I never understood why there is not just "the fare" to get from point A to point B.

[The Velveteen Ocelot]

19. Buying a plane ticket is essentially participating in an auction.

Airlines are constantly adjusting their fares to compete with other airlines. If one reduces its fares on a particular route, the other airlines will immediately do the same thing. Also, an airline can't make any money on seats that aren't sold - those seats are like fruit at the grocery store that has a shelf life and must be sold quickly or become worthless. That's why the fares are lower if purchased well in advance - if those seats are sold months or weeks before the flight the airline knows those seats are sold and can plan ahead of time whether to add more or less flights or a larger or smaller plane on that route. At the same time, they will hold some seats for last-minute purchases by people who have to take that trip, and they'll charge more for those. It's a weird way to do things, but the competition on fare prices is so intense that I guess they figure they have to do it that way.

[Curmudgeoness]

29. I can see why planning ahead works, but

when there are a number of empty seats on a flight (and I have been on some really light flights), I don't see the reasoning of charging more for those seats. It makes more sense to sell them at a discount just to get the extra bucks for those seats. No one in those seats means zero dollars, and you still have to pay for the fuel, etc.

[amborin]

38. yes, always realized that,

except this summer, we got tix way in advance; out of curiosity, i kept checking the fares to try to get some idea of how full the flight was getting (it was on a carrier that would not allow seat selection until 24 hrs prior to departure and we also could not see the seating chart until then)

lo and behold, the fare went down two weeks prior and stayed down; my domestic carrier, through whom i got the tix, would not refund us the difference either

[A HERETIC I AM]

20. You want completely practical fares?

Then the airlines should charge by the pound/mile, basically just like they do with freight.

[Curmudgeoness]

30. I couldn't agree more. I have been saying that for some time.

Put everyone on a scale with every piece on luggage and carryon and purse, and you pay for the ticket by the total weight. I know, I know, overweight people will have a hard time with this one (and I am not so light myself), and so will the people who carry tons of luggage on with them so they don't have to check baggage. But......it really is fair.

[SheilaT]

32. A long time ago, back in the 1930's I believe,

airlines actually did weigh the passengers. The planes were so much smaller that every single pound matter for the weight and balance calculations.

[Odin2005]

23. I think this was inevitable as flying became more common.

Eventually prices would have had to drop and make the old luxury-based model history.

[RagAss]

24. If they could hang us upside down on meat hooks, they would.

[annabanana]

26. They are old greyhound busses at 30,000 feet.

That's how they feel. That's the flying "experience".

[RB TexLa]

27. I don't care how the employees act, what food, drinks, magazines, or movies they have

All I want is to get on the plane where I am and get off of the plane where I am going. They can cut all the other stuff out.

[Gold Metal Flake]

34. Keep trying!

[RB TexLa]

35. Keep trying what, that's all I want from them is to transport me from one place

to another for as little of my money as possible.

[defendandprotect]

31. Peak Oil puts the future of airline travel in question -- solar planes?

One postive aspect of Peak Oil is ... No Oil/No wars --

but Air Force has been talking about solar planes --

[SheilaT]

33. I was an airline employee when deregulation happened.

We employees knew EXACTLY what was going to come about, that after a while airlines would resemble intercity busses, only without the charm and amenities.

And even though many fares are a lot cheaper, there are a lot of cities that used to have regular plane service that no longer do.

[KoKo]

42. The "Hub System" seems to be part of the problem today.

I wonder if as more people were flying for business if the prices wouldn't have evened out without Deregulation.

Agree about more carriers going to the smaller cities. Look at how we have to fly through a major hub way out of our way and change planes or wait an hour or two in to get to a smaller city because everything goes through the hub. The hub has weather problems in one part and the whole system can experience delays, cancellations and reroutes.

[MindPilot]

36. I wonder if you factor in all the other costs,

if it really is cheaper now. In raw dollars, maybe. But consider that $1442 cross country fare was a) probably non-stop and b} easily the equivalent of a first-class seat today. You didn't have to pay a bunch of fees; you bought your ticket and that's what it cost. Additionally there are "soft" costs like the extra hours you have to be at the airport to deal with security. Also several cites have new airports many miles from downtown, just as an example, the cab ride between downtown Denver and DIA can push $100.

[FreeJoe]

40. $100???

I regularly fly into DIA and only pay about $50 for a cab. Heck, it doesn't cost me anywhere near $100 to have a driver pick me up.

[bvar22]

37. Has the De-Regulation of ANYTHING ever benefited ...

..Working Class Americans? :shrug:

Surely there MUST be an example somewhere where De-Regulation has resulted in lower prices and better service.
I can't think of any.
Help me out.


You will know them by their WORKS,
not by their excuses.

Solidarity!
--------------------------------------------------------------------------------------------------------------------------------

[Hassin Bin Sober]

41. $1400? Wow. I never realized what a great benefit we had with my dad's airline employee privileges.

We used to fly from Chicago to LA or San Diego or San Fran at least once or twice a year.

I flew home most weekends from school in Oklahoma (1980s) (where I learned to fly) and my dad would pick me up at the gate and drive me across the field to his office.

He retired in '93 but I still had access to his benefits until he passed in '08. Though toward the end, due to increases in non-rev fees and IRS, it was easier and not that much more expensive to buy a ticket IN COACH - I sure miss that first class.

I miss my Pops too. :(

[trof]

43. It was an amazing benefit back than.

You got to be 'pretend rich' for a few hours.
The cabin attendant slogan: "Marry me and fly for free."
:-)