Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, July 26, 1993 TAG: 9309060246
SECTION: EDITORIAL PAGE: A7 EDITION: METRO
SOURCE: George F. Will
DATELINE: LENGTH: Long
In the 1960s, the case for deregulation began to be so obvious that even the federal government noticed it. It became obvious because of American federalism: California was large enough to be Pacific Southwest Airlines' sole market, which meant PSA was not subject to federal regulation. PSA charged passengers between San Francisco and Los Angeles half the amount per mile that regulated carriers were charging passengers between New York and Washington, D.C.
Deregulation was enacted in 1978. Since then travel habits and the airline industry have been transformed for the better. But the public that has benefited is strangely unconvinced.
Now, fortunately, Paul Sheehan, an Australian journalist who used a Harvard fellowship to study America's airlines, has published in The Atlantic Monthly ``What Went Right,'' refuting myths of deregulation. The myths are that fares have increased, airline employment has fallen, service has worsened for most communities, passenger growth has stagnated and safety has been jeopardized. Sheehan reports:
The average fare (price per passenger mile) is a third less than in 1978. Fares have declined in 10 of the past 11 years. The few fliers who pay more are being compensated with frequent flier bonuses (more than 6 million tickets given away in 1991) and more frequent flights. In the first decade of deregulation, annual passenger traffic exploded from 250 million to 450 million.
This democratization of air travel, which has fueled elite resentment of deregulation, helped put Greyhound and Trailways temporarily into bankruptcy. Airports are today's bus terminals.
Employment in the industry (average salary, $52,000) is up 75 percent since deregulation. The average number of accidents per year is down 53 percent. In the last 55 years, there have been just five years with no airline fatalities. Four have been since 1978.
Most secondary cities have more flights than in 1978, thanks partly to new regional airlines finding market niches. There are Reno Air, Kiwi (six planes serving Newark, Chicago, Atlanta, Orlando, Puerto Rico) and others. The most spectacular success is Southwest, which has been profitable since it began 22 years ago.
Such airlines are prospering primarily because of low prices. Deregulation has proved that Americans have become aggressive shoppers for bargains. (And not only for travel bargains. Proctor & Gamble's announced intention to cut its worldwide work force by 12 percent is related to the fact that in household consumer products, as in other sectors of the economy, famous national brand names are being fiercely challenged by less famous but also less expensive upstarts.)
The biggest carriers have lost lots of money, and red ink in business gets lots of black ink in newspapers. But one reason for the losses - bad judgment in purchasing too many airplanes and not foreseeing new ``niche airlines'' - produced price-cutting wars to fill the new seats. This ``bad news'' was terrific for fliers.
Too many seats were added just at a moment when new technologies - fax machines, teleconferencing, video conferencing - were giving the airlines' most profitable customers, business travelers who fly frequently at short notice and pay full fares, ways to minimize trips. But neither the costly overexpansion by the large carriers, nor the subsequent price wars, disprove the wisdom of deregulation, unless bad choices necessarily prove that there should not be freedom of choice.
Yes, Pan Am, People Express, Braniff, Eastern, Frontier, Ozark and others have disappeared. So have Studebaker, Nash, Hudson, Packard and other automobiles. The extinction of failed competitors is not a ``problem,'' it is freedom working through capitalism's process of creative destruction.
Yet doubts about deregulation have, Sheehan says, ``been fanned by a media culture that cleaves almost pathologically to discord.'' Indeed. A familiar axiom of journalists is, ``We don't report the planes that land safely.'' But society's successes as well as its crashes are newsworthy.
Trouble is, successes sometimes are reported as crashes because, in commerce as in war, success can involve carnage. And crash-conscious journalism does not see that, for example, IBM's and Sears' difficulties are aspects of larger stories - the success of Microsoft and Walmart. Furthermore, the ethos of liberalism that permeates journalism holds that compassion requires the prevention or amelioration of pain. But change often is painful.
Finally, many journalists are disposed to disbelieve, or are ideologically blinkered from seeing, a success that results from the retreat of government and the consequent resurgence of capitalist energies. One lesson of this story is that America's airline industry, although troubled, is less so than American journalism.
Washington Post Writers Group
by CNB