My New York Times Piece On How More Regulation Would Make Flying Worse

Government Regulation

Last week the New York Times approached me about contributing to its ongoing Room for Debate feature for the third time. (First time, second time.) The point up for debate: Do Airlines Need to Be Re-Regulated? Keep in mind we’re not talking about safety regulation here. This is commercial regulation, and as long-time readers know, I’m against it. But I like this format because it allows several contributors to put up their thoughts in a concise format.

Is Re-regulation Good? No

This time around, there were six contributors. Holly Hegeman from PlaneBusiness and the Aviation Queen herself Benét Wilson had feelings similar to mine. As for those who think re-regulation is the answer, I’m pretty sure you can guess two of the three contributors without giving it a second thought. Yep, Charlie Leocha and Chris Elliott led the charge along with Sara Nelson from the Association of Flight Attendants (who focused on the labor aspect).

I’m reprinting my piece here so we can get a discussion going. Please go to The New York Times Room for Debate page to read the rest of the submissions. Then come on back and hit the comments section.

Every time an airline does something that people don’t like, there are always calls to re-regulate the industry. As the refrain goes, “Airlines are awful now. Let’s bring back the good old days!” The problem with that statement is two-fold. First, the old days weren’t so good. Second, the airlines actually aren’t awful at all these days.

I know, you’re probably thinking about the “old days” when everyone was smiling, well-dressed, and eating hand-carved chateaubriand in the sky. You know why it was like that? Because tickets cost a fortune. The airlines were regulated and that meant the government decided where each airline could fly and how much they could charge.

Fast forward to today and it’s completely different. Fares are far less and schedules far more convenient. In fact, since 1979, shortly after the airlines were deregulated, fares have dropped nearly 30 percent (adjusted for inflation) INCLUDING bag and change fees.

With fares so much cheaper, you’d expect the product to have gotten a lot worse. Sure, the meals aren’t what they used to be, at least not in coach. But back then the meal was the only thing distracting travelers from a very long and exhausting journey. Today we have, in many cases, in-seat or streaming video, live television, power outlets, and WiFi to pass the time.

After years of struggling through competitive wars and external shocks, the airlines have now consolidated to a point where they can really invest in the product. That means a better onboard experience, including entertainment, WiFi, food and drinks, baggage handling, and performance. Airlines have been falling over each other trying to claim the title for best operational performance, even putting out guarantees for corporate customers. Department of Transportation statistics through March of this year show more than 82 percent of flights arriving on time, a near record performance.

Are there more seats on airplanes and less legroom to be had? Yes, but only because airlines are responding to people’s desire for cheap fares. By adding more seats, airlines can push fares down. At the same time, airlines are giving us something we haven’t had before: true choice. For those who want extra legroom, they can pay for it (and likely still pay less than they did for regular coach in 1979). Even the cost of first class has decreased. But for those who value price above all, times have never been better.

The worst part of the travel experience today is the part that’s the most heavily-regulated; in fact, it’s run by the government itself. The security experience is awful, but everything else is pretty remarkable. A re-regulated industry would only make things worse.

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60 comments on “My New York Times Piece On How More Regulation Would Make Flying Worse

  1. I think you were attacking a straw man.

    The pro-regulation columns dealt with stuff like limiting change fees, fee disclosure, and code shares. I’d be interested to hear your argument against proposals like this, rather than your argument against wholesale re-regulation of schedules, which nobody is seriously proposing.

    1. grichard – Well that may be the case, but it’s what the NYT asked for. I had a word count limitation and less than 24 hours to do it, so it was either write what they asked for or not participate!

      I’ve written about each of the things you mention over the years, and some make sense while other don’t. Limiting change fees? No. I don’t like the high change fees as much as the next guy, but it’s not deceptive to charge them. The airlines should be able to do it if they want. Fee disclosure? That can be good, just depends on the proposal. Sometimes it makes no sense. And codesharing I still find to be beneficial as long as everything is disclosed. I don’t like it and wish it would go away, but there is some benefit.

      1. ” The airlines should be able to do it if they want.”

        You mean all three of them? And no, carirers without a first class aren’t an alternative for anyone who flies monthly. $500 change fees for tickets that cost less than twice that cannot be justified by anything other than “because we can.”

        1. “And no, carirers without a first class aren’t an alternative for anyone who flies monthly.”

          So what you’re saying is that you’ve chosen these 3 airlines based on the service they provide, and that said service is more important to you than the increased flexibility that other carriers offer.

          1. Absolutely correct. If you’re flying 100K miles a year, service (non-stops, destinations, access to upgrades) trumps price. My complaint is with the level to which change fees have risen, which is well out of proportion to the purpose they putatively serve for the airlines.

  2. Bob Crandall has been outspoken (at least 4 or 5 years ago) about thinking airlines should be regulated again (though with a lighter touch than pre 1978).

    Surprised they didn’t ask for his opinion. He never shies away from offering one…

    Would be curious what his nuances are in the current consolidated environment.

  3. You are obviously preaching to the choir here… the NYT crowds, maybe not.

    Service and low fares are by far the best argument against deregulation. Despite the memories some have of the past, the only real positive was more space on the plane; technology at every point has made for a richer,less costly, and more reliably travel experience today.

    The only people within the industry who argue for reregulation are those that cannot win in the current environment – and they are actually the ones who would least likely benefit under any reregulation scenario. Americans are addicted to low fares and the impact of low fares in the industry and the resulting impact on costs will only grow.

    Those outside the industry who argue for reregulation probably really don’t believe they will achieve it but think they can bully the airline industry into offering more service for less price while also diverting American’s attention from the government-controlled part of the process – ATC and security – where the government clearly doesn’t believe it should be held to the standard to which it holds airlines. .

  4. I think the re-regulation crowd is a little bit like the politician that panders to the voters by promising lots of great things while glossing over who or how it’s going to be paid for. That said, there have been egregious things that airlines have done which gives fuel to the regulation camps fire. Airlines have gotten better at good old fashioned customer service in the past few years as things have improved. That said, damage has been done that’ll take a long time to correct. While I don’t think we should overreact and go back to the days of regulation, but keeping the airlines in-check is a good thing. Thankfully things like social media are doing more to make that happen than anything the gov’t could do.

    1. You might also ask that people dress ‘casual upward’. No tank tops. No short shorts. And respect other passengers space. Do not take your seat to the far back position, fast, while people are eating. Mw

  5. I do think that Rule 240 should be codified into law. Otherwise, as long as there is at least ONE airline (Southwest) that still allows all coach passengers to check two bags free and does not charge outlandish change fees, so that passengers have a true choice, government should refrain from re regulation on non safety items.

  6. Nelson’s points about deregulation and its continued impact on labor are, unfortunately, dead on. And while the usual free market harridans will shout about $199 transcon airfares being an American birth right, it’s also important to remember that much of that savings has come at the cost of good paying middle class jobs in all of our communities.

    1. Uh, since when is it the obligation of government to provide good paying jobs in any community?…

      The fact is there are probably 3 times as many airline workers today (if not more?) than there were under regulation. Just not all of them want to belong to a union.

      1. I’m not sure what the government is obligated to provide under any circumstances, airline stuff or no.

        Although, from a labor standpoint, I’m not sure I’m on board with a system that allows airlines to cut pay (through bk) and pensions (offload to the PBGC) when the contracts they’ve agreed to become something they are unwilling to live up to. While the government may not be obligated to “provide” such jobs, it is providing a system that allows the airlines to behave like this.

        The aviation labor cycle is actually quite nasty, and a very big reason why I am not employed directly by an airline.

        1. To top it off, in the AA Bankruptcy I believe employees took pay cuts, and pensions were offloaded to the PBGB, but shareholders still got something out of the bankruptcy as well. Other parties should’ve been made whole first before the shareholders made a recovery.

    2. It is worthwhile to compare employees of airlines to those of trucking firms. Both industries are exceptionally low margin and very cyclical, and both industries were deregulated decades ago, though with increasing regulation recently. However, F/As and pilots (even with bankruptcies etc) have done far better than truckers have in terms of maintaining their salaries in real terms.

      Whether this is due to unions, barriers to entry (to becoming a commercial pilot vs becoming a trucker, or to starting an airline vs starting a trucking company), and/or other factors, I don’t care to debate. Point is, pilots and F/As could have it a lot worse, and it makes for interesting (no matter the agenda) comparison.

      1. Kilroy – And it’s about to get a whole lot worse for truckers. I think it’s safe to assume that self-driving technology will decimate that industry when it gets a bit further along.

  7. Nice that the usual NYT paywall wasn’t up around this discussion, too.

    I did read the opinions yesterday and fully agree that airline consolidation has been abused by the remaining big three. Change fees do represent more than “a few keystrokes,” as one commentator noted — they help balance revenue predictability. But airlines have steadily inflated them to a ridiculous degree out of pure greed, knowing that the current regulatory infrastructure is rigged in their favor. It’s high time that some of that infrastructure is biased towards consumers.

  8. “The most dangerous words in the English language are I’m from the government and I’m here to help you.”- Ronald Reagan

  9. They invested in the”Dreamliner” and I was disappointed by my latest flight with a well-known carrier. I was so excited to go on the new “Dreamliner” which ended up being no better than sitting on a bus for 12 hours. The seat quality was bad and less room and my whole body hurt by the time we landed. If new and better with more comfort and lower prices is not the true story, don’t allow them to advertise it. I say more regulation on the advertising that these airlines are using would result in the customer deciding the success of the airline, therefore, a better consumer experience.
    Clarissa Stewart, Legal Advisor

    1. I would beg to differ; my first flight on an Air Canada 787 was wonderful. I have actively been avoiding both United and Lufthansa now after experiencing their product, although Toronto is not nearly as fun to stop over in as Munich or Frankfurt =)

  10. As others have said, I don’t think anyone is seriously suggesting a return to the regulatory scheme of old. That said, deregulation has reduced fares, but it has also significantly reduced flying options for smaller and mid-sized communities. With further stringency to EAS and other subsidy programs, there is less and less incentive for smaller communities to be served, and in many cases this has a large impact on businesses, tourism, etc. There are few alternatives for many communities to be able to have connectivity, and despite the internet, travel is still an essential component to conducting business, not to mention the leisure impact. There definitely has to be some push back on consolidation and market capture by the big 3.

    1. This is a really tough subject. Are people owed air service connectivity? If so, how much? Much of the controversy around EAS involves towns that are within some X minutes drive from an airport with unsubsidized commercial service.

      If areas are so rural that there is not enough demand for unsubsidized air service, that’s just life, not a public policy issue IMHO.

      Do you have stats to back up your claim on the impacts of tourism and business? I grew up in the upper midwest. It’s one thing to say “there’s an impact”. It’s another to say by how much. Because, we have to ask whether the cost providing the service is greater than the impacts to the region. Many businesses in small towns are regional businesses, and in those areas, the best air service you can hope for is a non-stop flight to a hub. That’s just not going to cut it for travel around the region. So, you drive, or on occasion, use GA.

      You talk about consolidation leading to loss of air service in small towns. The reality is, when there were more airlines, you had really fragmented service. Delta was big in the south, Northwest big in the midwest. To get from a small town in the midwest to a small town in the south, you were making a double connection, which is undesirable (and rare.) With a contraction in service, you’re going to have to drive further to get to an airport, but my guess is you’re also cutting your trip down to one stop instead of two.

      1. Its hard to parse out economic cause and effect, and it would be tenuous to say that air service is even a major predictor of business dollars being invested in a community. That said, if you view airports and air service as akin to infrastructure investment for other transport modalities, it is clear that investment in service for smaller regions is lacking. This is not unlike fights in states (like Minnesota, where I live) about public buildout of broadband and other infrastructure considered essential for smaller communities to maintain some semblance of an economy. Without some sort of equalizing efforts, consolidation will continue apace in a wide variety of areas of life, including the rural/urban divide.

      2. Agree on the question of impact re: EAS.

        Disagree on the question of consolidation increasing connectivity between small cities. If you’re flying from small city in one region to a small city another, you’re still likely to have to make two stops. United and Continental merging doesn’t make it any easier to get from Bangor, ME to Grand Junction, CO. Those hubs and the destinations reached by them are virtually the same.

        The only difference is that now you fly “United” marketed flights the whole way through instead of a mix of United and Continental. Don’t forget that pre-consolidation, you already had significant inter-carrier cooperation thanks to code-shares and alliance membership. Very little has changed.

        On the other hand, I’d also say the lack of service to small cities has more to do with the restrictions on EAS and pilot shortages among small regional carriers than big carrier consolidation.

    2. Government already had the chance to do that but the US Justice Dept signed off on each and every airline merger. Can’t put that toothpaste back in the tube now. Government had their chance to weigh in on industry consolidation and failed to do so. Absurd to suggest reregulating, even in part, just so the feds can have another bite at the consolidation apple when they choked on it in the first place.

    3. Sean S – Small community air service is something that’s a real issue, but regulation isn’t the answer there. If the government mandated airlines serve smaller communities with greater frequency than they do today, the airlines would then have to charge more for sustainable routes to cross-subsidize the smaller ones. That’s not a good plan.

      The better plan is to do something like EAS if the government decides that’s a priority. The airlines are only going to serve the markets that make financial sense. If the government wants more service, then it should put up the money to make it happen and give the airlines incentives to do it.

      1. I would argue with that perspective. Why are subsidies considered an efficient form of public policy, but regulation which achieves the same goals but spreads the pain around, not? If I have a quibble with EAS it is that, like many other economic development packages, it assumes from the start that the best means of achieving an end result is to bait private investment into it, as opposed to leveraging one’s control to make them do it.

        1. Sean S – I don’t see why the burden should be forced on private industry at the expense of routes that really matter. If fares are higher on other routes, then capacity will end up going down. If you want to support something that’s not economically viable, that’s what taxes are for.
          Arbitrary decisions forcing airlines to serve routes they don’t want makes no sense to me.

          1. Burdens are forced on private industry every single day, often times, though not solely, for reasons of public good. And no, actually, supporting something that is not economically viable is not what “taxes” are for. As I mentioned above, the argument that getting private industry to do something through tax incentives or direct subsidy is a backwards method, especially when they can be compelled to do something through other means. Either way it costs something, but it discourages this continued idea that anytime the private sector needs to do something for the broader benefit of the community they need to be paid to do it.

            1. Sean S – It’s hard for me to see how this kind of thing is in the public good. You’re effectively forcing air service on people who won’t use it enough to make it commercially viable at the expense of those who really do want it and need it. There’s no good reason for this.

      2. This EAS discussion probably should be elsewhere, but I fail to see why airports can be 60 miles apart and receive significant federal $$$. Apart from supporting EAS service into some of these airports, the ones that don’t have commercial service are receiving federal support in the form of other government services.

        Consolidating airports will probably never happen – ever. Far too many political interests involved, regardless of your (political) color!

        So, we’ll continue to pour federal funds to duplicate this situation.

        1. ed.jacob – I agree, because it becomes a political process. Nobody is willing to sacrifice any airport in their home district or it’ll mean lost votes. I have plenty of issues with EAS, but just imagine if airlines were forced to fly to every tiny town around just because it was a political requirement.

  11. I’m surprised by Cranky’s stat that after adjusting for inflation, airfare has only decreased in cost by 30% since 1979. I figure that every other transportation and technological device has decreased in cost a lot more than that. I’d wonder how that compares to the cost per mile of owning and operating an auto? Probably about the same…and the quality of cars since 1979 has gone up a lot.

    1. When I google “airfares 1979” the first story that pops up is an Atlantic article that links to a chart showing fares and fares with fees in inflation adjusted terms through 2011. With fees, it looks like fares were 40% lower than in ’70, and with fare increases since 2011, I could believe the 30% lower figure.

    2. Jeff BTV – I’m guessing you could probably get a bunch of different numbers on that. This was just for domestic and came from A4A. Might be other ways to cut it as well.

    3. If “every other transportation and technological device has decreased a lot more than” 30% real since 1979, that would indicate a surprisingly small drop or real rise in other prices to balance it. The Consumer Price Index is a 0-real-change benchmark, so if half the goods in the basket decreased in real price by 50%, then the other half actually increased in price by 50%. Given that 0-change benchmark, a 30% real price drop is very significant. Tech devices are an outlier, and it’s pretty remarkable how quickly and consistently their prices have dropped, but I don’t think that lessens the value-add the economy has seen from deregulated air transport.

  12. I think the entire discussion was flawed from the get go because the NY Times did a lousy job setting up the discussion. While I agree with you on the broader anti-regulation discussion, I think there is some room for debate on setting standards on fare disclosures, which Chris Elliott set up well (don’t fully agree with him on his other two points however) – if I remember, your views probably fit in with what he discusses.

    1. I agree with you completely on this. When I read it, everybody was talking about different things, so it wasn’t really a “pro/con” debate.

      Strangely, I agree with Elliott a bit about his frequent flyer issues regarding ownership of miles and regular award chart devaluations. Usually, he rails too far into the extreme on hating loyalty programs, but at face value, I’ll agree with the comments he’s written.

    2. SJ – I don’t actually agree on the fare disclosure piece. If a company wants to offer lower prices through one channel vs another, then why is that bad? When you go to buy some headphones, Amazon may have the lowest price or it might not. But chances are if you compare it to another website, the price will be different. If airlines want to behave like other businesses, that shouldn’t be an issue.

  13. Give something for the government to do and they screw it up, is that your opinion? Security, ATC, safety. Should we give those functions to the airlines and say here, you do it if you think you can do it better! I don’t think so!

    “People’s desire for cheap fares.” At least because of government regulation, there is some transparency of fares. Were there such transparency of how an airline operates, how you measure “service,” this is where more regulation is needed.

    How airlines can manipulate performance–pad those schedule times, baby!
    How airlines can manipulate marketing–“Every flight we have is a “direct” flight. Stops, plane-changes, who cares, it’s how we number the flights that counts!”
    How airlines can manipulate the flight operating carrier–“It’s the marketing carrier that counts. Who cares if its Mesa, or some airline you never heard of. Just wait until all of our spoke flights are run by Uber!”
    How airlines keep you in the dark as to our fare codes and rules–“Look pal, this is the deregulation era and if your e-ticket doesn’t show the fare code and our website doesn’t allow you to get access to the rules, tough. You should have done this before you bought your ticket, not after it. And, no, there are no tariffs for you to read, so go away!”

    I won’t call it re-regulation, but there are government regulatory improvements that need to be made, whatever you want to call them.

    1. I think the government should force us all back into horses-and-buggies. That was the real golden age, when you could find gold in a rush. I’ll take the free-market headaches of cheap fares and cross country trips in 5 hours; I’ll let you get cholera while on the Oregon Trail. Without the government making it safe, the airlines and Boeing/Airbus would be happy for planes to be falling out of the sky regularly, right? It could be like the “collateral damage” the government is always comfortable with when justifying its intentional killing thousands of miles from here using different types of winged machines of death.

    2. I can’t speak for Brett but that’s certainly my opinion.

      Look no further than the government run, habitually late, money hemorrhaging, national transportation leviathan known as Amtrak. Yeah, I really want the same government clowns managing the airlines (sarcasm alert).

    3. JayB – If you’re talking about disclosure rules that make things more clear, then that’s fine with me. Sure that’s technically regulation, and I’m not against all potential pieces of regulation. Disclosure of things like fare rules helps avoid “deceptive practices” which I think should be under government purview.

      That’s quite a stretch to suggest that I think government can’t do anything well. (In fact it’s completely wrong.) Government has a very important place and can do a lot well. But interfering in a non-monopolistic business model isn’t on the list of things it should be tightening the screws on.

  14. Deregulation means that, if you’re really convinced that there are great market niches out there to fill, you can go ahead and start an airline to fill that niche. You think lots of people just like you will be glad to pay 3x the going rate for their Yakima-to-Hilton Head flights if there’s a strictly-enforced dress code? Start up your airline, write up your dress code, and rake in all that extra cash! List prices higher than all your competitors, but without change fees–if everyone wants this as bad as the New York Times commentors seem to suggest, it’ll really pay off nicely. But instead of taking the free market approach, folks want the government to legislate their own particular want and require everyone else in the country to unwillingly subsidize it.

    All that said, I think that the current regulatory climate is not ideal. Startup airlines seem to have struggled to get off the ground significantly in recent years. To the extent that this represents legitimate safety concerns, that’s a good thing–but I suspect it has far more to do with overly complex and burdensome bureaucracies. Maybe it is time to allow foreign airlines to compete domestically. I bet WestJet, Volaris, and RyanAir could really shake things up without quickly collapsing the way most poorly-considered startups seem to.

    1. Your first paragraph is spot on.

      Change fees are an interesting thing; I’ve always wondered why they are such a hot topic. (Ok, anything with an airline is a hot topic.) As a VFR traveler, it’s rare that I have a need (or even a want) to change my ticket. Meals on a flight under two hours, who cares?

      Believe it or not, I was happy when airlines allowed a no-status passenger to pay for an exit row seat. Back in the day, when I was a silver with Northwest, the single biggest benefit to me was the ability to select a bulkhead or exit row seat at time of booking. Without status, I was stuck. Now? I can outright pay for it, and not worry about having to maintain “status.”

    2. Patrick – I’ll agree with your second paragraph entirely. There are currently far too many regulatory barriers to entry for new entrants, and it’s worse than it’s ever been in the deregulated era. The government should revisit the rules to make it easier for new entrants to take flight. They’ll still have a heck of a time succeeding, but they should have a better shot than they do today.

      I’m also all for allowing foreign airlines to come in. You do need to have labor rules to ensure someone can’t just bring in cheap labor from southeast Asia. It needs to abide by American labor rules and standards, but that’s something that can be solved.

      1. Brett,

        For the labor piece, I think something similar to the rules in place regarding domestic shipping could work. Those rules state that ships traveling between US ports must have domestic crews, domestically made ships, etc etc, instead of flags of convenience and cheap sailors from the Philippines and India.

        Call it, say, 80% minimum labor by US citizens on domestic flights by foreign airlines (to allow for a little flexibility), FAA approved aircraft and maintenance programs, and a few other details, and I think that should be reasonable.

        I don’t necessarily agree with that (just as there are scandals involving labor abuses at Foxconn factories making parts for iPhones, why not let the free market pressure airlines on their labor practices?), but I think it would be reasonable.

        I would LOVE to have foreign carriers operate domestically. Even a third world airline like LAB of Bolivia provides better service for <4 hour flights than I typically get from US carriers, at least in my experience.

  15. I saw an editorial in the Boston Globe suggesting that airlines should get rid of first bag fees in order to expedite the security lines. However, does anyone think that checking in a bag is quicker than going through security?

    For all the complaining about bag fees, you could always try to ship your bags using UPS or FedEx for less (good luck with that).

    Also, when it comes to seat room, I think I’m one of the few who cares and I’m willing to pay more for the seats with extra legroom or fly W or J internationally. But, talking to my sister, she was very happy to get a ticket for less than $300 on F9 despite the utter lack of legroom. To her, price was primary driver. If there was a regulation requiring a minimum pitch causing ticket prices to increase, I might not have seen her that weekend.

    The only fee that bothers me is the change fee. I still think $200 is highway robbery. I still think that anything over $100 is a rip off. So, I make sure I’m totally sure I will fly a trip before booking it.

  16. As others have said, I think cranky’s response is a straw man. No serious person wants to go back to pre-1978, so arguing against that is irrelevant. While the NYT seems to be at fault for not setting up a logical conversation, this straw man is something I see with regularity.

    A more interesting question would be whether the government should have allowed so much consolidation. Step by step, I understand allowing each merger or acquisition. But in aggregate, in hindsight, it seems we’ve gone too far. A bit more competition would make for a healthier situation.

    1. My theory is that it still will be the same as those airlines that did merge or were acquired probably wouldn’t have survived and maybe out of business. Those that did would not have the ability to offer the flexibility of routes that exist now.

      The other airlines would also be weaker and would not be investing in their product like they are now. Thus the airline industry would not be as viable as it is now.

  17. What got me was that most if the references to codesharing and alliances were really complaining about JVs, a very very differnet thing from codesharing and alliance partnership

  18. Fare classes. There is no coherent argument as to why airlines should not be regulated to display the fare class clearly together with the price, just as they’re required to clearly identify the cabin of service.

    This has serious repercussions for mileage accrual, bonuses, upgrades, etc., and the reason for not including it clearly is only rooted in the carrier’s interests.

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