The Deregulation Act of 1978 – Part Four – July 24,2009

Today I finish the series on Airline Deregulation. A lot has been said on the subject and I have said but a little. It is my hope that I have provided an insight that proved beneficial; however, if not then I need to work harder. As always, I would like all aviators to connect with their roots and one of the ways they can do that is by using the “Third Dimension Blog” as a resource.

Quote of the Week

“Travelers are always discoverers, especially those who travel by air. There are no signposts in the air to show a man has passed that way before. There are no channels marked. The flier breaks each second into new uncharted seas.”—Anne Morrow Lindbergh “North to the Orient” 1935

Airline Deregulation

Deregulation was based on the premise and expectation that an unregulated industry would attract new airlines and increase competition, with the obvious result being lower fares and improved service. The existing, as well as the new, airlines would be allowed to enter and serve any market they wanted, and provide service at whatever price they thought reasonable. Again, the goal was to boost competition and expand service. This was certainly good for the consumer, but what about the airlines?

We have talked about the practices that the airlines adopted to stave off the competition, and how the business model created under the CAB would ultimately bring about the demise of the majority of the legacy carriers, but we have not talked about one very unique feature of deregulation—The Employee Protection Plan.

The Employee Protection Plan (EPP) was devised to provide displaced employees with compensation and to grant them the right to be rehired by another airline before any other potential candidate was considered. However, this program never provided any assistance or compensation to the employees of failed airlines, and so it was ultimately repealed by the Congress. The paradox here is that the airlines themselves were the biggest opponents of this plan. As I have said before, “Job security as an aviator is a myth even in the best of times”, and the struggle continues.

There is very little information available about the actual damage done to the airline employees and their families. Most people seem to be focused on the consumer, and how they have benefited. The general consensus by these experts is that because fares have gone done some thirty percent between 1978 and 1990, we have been successful with the grand plan. Experts also say that productivity has also increased, but the question remains: Did the consumer pay for that, or did that responsibility fall upon the airline employees and their families?

Another group of experts describes deregulation as an “unfinished revolution.” In this article, they speak of the first wave of deregulation as the hub and spoke route system and the success of that concept. The second wave was the successful introduction of the low-fare airlines flying point-to-point service after point-to-point was abandoned by the full service airlines. What was that about successful point-to-point? The third wave of deregulation was the introduction of the regional jet and the cost savings to the legacy carriers. The final will be the deregulation of the airports and the ATC system.

While many of these statements may have been backed by statistical data and facts to support their ideas, few people have taken into consideration how these changes impacted the airline employees and their families. What research has been conducted on how their lives have been impacted? The whole truth and complete story may never be represented fully, and certainly doesn’t sell well in Washington or to the consumer.

Next week we will start a new series on the “Legacy Carriers”. So, until then take some time to look back, connect with your past and remember as an aviator you are a “Gatekeeper of the Third Dimension.”

Protect your profession, your future and the future of your fellow aviators.

Robert Novell

July 24, 2009