Tuesday, July 24, 2012

Airline deregulation - really?

I remember sitting beside San Francisco Bay late one night (I was fishing for Jack Smelt) in the mid 70s. I was listening to a late-night news interview program on my portable radio. The conversation was about what a great thing deregulation of the airlines would be. The proponent was stating that competition would lower fares, service would be better, consumers would be happier and the industry would thrive. Get government out of the way and it will be heaven on earth, or at least in the sky.

I don’t remember who was touting this – greatest thing since sliced bread – but I do remember thinking this is not a great idea.

Today, I believe I was right.

Have you flown lately? How do you feel about service? How do you feel about the product being delivered?

There are those that will say that fares today are cheaper than they were in 1979. But are they really? The comparison is always to the cost of the ‘average’ round-trip fare of thirty years ago and today in today’s dollars. But I don’t think that is a realistic way to judge the success or failure of deregulation. Some routes might have a lower dollar cost for the ticket, but some routes may well be higher.

But more relevantly, what does that ticket buy you? Is it the same quality product? Experience? Service?

Do you now have to factor in the cost of buying food, checked luggage, blankets, headsets?

Is the seat as comfortable? Do you have the same amount of legroom?

What is the cost to you in productivity or actually cash in terms of interminable flight delays and cancellations?

Arguably the product has deteriorated significantly. If you could buy the same airline product and experience of thirty years ago, today, what would it cost?
What is the value you are actually getting for your airline ticket dollar compared to thirty years ago?

Additionally, the industry is worse off. Airlines are struggling. Many have gone out of business or into bankruptcy. Where are Pan Am, TWA, Eastern, Braniff, PSA?

Deregulation? You can have it.

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