A New Approach to Regulating the Airline Industry. Embark on a transformative journey with our comprehensive guide, “How to Fix Flying,” and discover groundbreaking strategies to revolutionize the airline industry. Experience the pinnacle of innovation and policy reform that promises a future of seamless, passenger-centric air travel.
Dive deeper into the full report to explore the visionary blueprint for a reimagined airline industry that prioritizes your comfort and convenience.
Table of Contents
- Genres
- Review
- Recommendation
- Take-Aways
- Summary
- Policymakers believed deregulation of the US airline industry would result in a better experience for passengers. They were wrong.
- Officials must implement a new industry-wide regulatory framework.
- Passengers would benefit from a complete overhaul of airline price policies and loyalty programs.
- About the Authors
Genres
Aviation Policy, Regulatory Reform, Consumer Rights, Airline Economics, Transportation Law, Public Policy, Economic Analysis, Industry Innovation, Corporate Accountability, Environmental Sustainability
The report “How to Fix Flying” by William J. McGee and Ganesh Sitaraman presents a critical analysis of the current state of the airline industry and proposes a comprehensive set of reforms. It addresses issues such as competition, pricing transparency, passenger rights, and industry resilience. The authors argue for a return to structural regulation to ensure fair pricing, protect passengers, and maintain industry health. They suggest policies ranging from simplifying fare classes to establishing minimum seat sizes and protecting infants in flight.
Review
The report is a well-researched and compelling argument for significant changes in the airline industry. It is thorough in its examination of the problems and bold in its proposed solutions. The authors’ expertise and experience lend credibility to their recommendations, making it a must-read for policymakers, industry stakeholders, and passengers alike. The report’s focus on both immediate and long-term reforms makes it a valuable contribution to discussions on the future of air travel.
Recommendation
In 1978, Congress passed legislation deregulating the US airline industry. The goal was to make the sector more competitive, which should have resulted in lower consumer costs and more travel options. But since then, competition has actually decreased, with only four legacy airlines now serving passengers, who face increasing prices and reduced service. Aviation experts William McGee and Ganesh Sitaraman examine the industry and propose a regulatory architecture that would address these problems. Airline executives and passengers will find this a robust analysis of the sector and its issues.
Take-Aways
- Policymakers believed deregulation of the US airline industry would result in a better experience for passengers. They were wrong.
- Officials must implement a new industry-wide regulatory framework.
- Passengers would benefit from a complete overhaul of airline price policies and loyalty programs.
Summary
Policymakers believed deregulation of the US airline industry would result in a better experience for passengers. They were wrong.
Flight delays, costly tickets, airline bankruptcies and poor travel conditions plague air passengers and industry stakeholders. Congressional action in 1978 intended that airline deregulation would increase competition. The legislation upended a 40-year period in which the Civil Aeronautics Board had managed carriers’ flights and pricing. While this bureaucracy was not ideal, the United States at the time had 12 major airlines, and passengers were, on the whole, satisfied with service and fares.
“Air travel in the United States suffers from serious problems. For passengers, the flying experience has become a source of frustration — from smaller seats and junk fees to delays and cancellations.”
In the post-Board landscape, officials believed more airlines would enter the market, fares would decline, routes would expand and service would markedly improve. Fast-forward 45 years: The sector now relies on only four airlines, and passengers are upset about a lack of routes, opaque pricing and poor service. Over four and a half decades, the airline industry has consolidated on a massive scale, bankruptcies have become common and the government has provided taxpayer-funded bailouts.
Officials must implement a new industry-wide regulatory framework.
Policymakers must craft a new regulatory framework designed around four pillars: “Resilience, Competition and Geographic Access; Fair and Transparent Pricing; Protecting Passengers and Ensuring Safety; and Oversight and Enforcement.”
In regard to competition, “hub concentration” hinders competitive balance, as single airlines control the bulk of flights in large metropolitan airports. Rules can address this by limiting an airline’s flight capacity to no more than 30% of all flights from any one airport. Policy officials should also restrain “common ownership” – one airline owning a percentage of a rival, which stifles competition.
“The many carriers that existed in the 1990s have now consolidated down to a mere handful. Meanwhile, airlines are pulling out of small and even midsized cities, with serious downsides for their economic opportunities.”
Congress must expand flight services to secondary and tertiary markets. One solution is the “Draft Pick” system, which requires airlines to choose underserved markets and provide daily and affordable service. Congress should require airlines to prepare a resilience plan to address potential travel crises. And in concert, airlines should maintain a capital reserve fund. “Interlining” – a practice that airlines followed for years – involves one carrier accepting the tickets of competitors. Airlines should reinstate this practice, which facilitates the efficient transport of passengers based on seat availability.
Passengers would benefit from a complete overhaul of airline price policies and loyalty programs.
Regarding fair and transparent pricing, Congress should eliminate dynamic pricing and it should standardize rates, as well as reduce the plethora of fare classes. Officials can eliminate, or simplify and standardize, airline loyalty and point programs. Doing so would add a competitive lever to the industry, which would spur lower prices and elevate service levels.
In protecting passengers, the government’s top priority should be to mandate that all maintenance and repair on aircraft occur domestically, not in foreign countries. Congress should bring the archaic air traffic control system into the 21st century, via the “NextGen Air Traffic Control system.” Legislators should pass a sweeping passenger bill of rights.
“Over the past several decades, however, we have seen a slew of airline bankruptcies and waves of consolidation, to the point where we now have only four major carriers, which use opaque and deceptive pricing systems and yet still depend on government support in bad times.”
Concerning governance, oversight and enforcement, Congress can grant the Department of Transportation greater powers to regulate carriers under the “unfair and deceptive practices rule.” The US airline industry faces numerous challenges, but comprehensive reform can mitigate these deficiencies and improve the environment for all stakeholders.
About the Authors
William J. McGee is a senior fellow at the American Economic Liberties Project and the author of Attention All Passengers. Ganesh Sitaraman holds the New York Alumni Chancellor’s Chair at Vanderbilt Law School and is the author of Why Flying is Miserable: And How to Fix It.