The latest Bloomberg Businessweek features in interesting commentary from Supreme Court Justice Stephen Breyer, who helped push for airline deregulation while serving as an aide to Sen. Edward Kennedy in 1978.
Did deregulation meet its stated goal of lowering fares? Clearly, yes. Still, Breyer seems ambivalent about the results:
No one foresaw the industry’s spectacular growth, with the number of air passengers increasing from 207.5 million in 1974 to 721.1 million last year. As a result, no one foresaw the extent to which new bottlenecks would develop: a flight-choked Northeast corridor, overcrowded airports, delays, and terrorist risks consequently making air travel increasingly difficult. Nor did anyone foresee the extent to which change might unfairly harm workers in the industry. Still, fares have come down. Airline revenue per passenger mile has declined from an inflation-adjusted 33.3 cents in 1974, to 13 cents in the first half of 2010. In 1974 the cheapest round-trip New York-Los Angeles flight (in inflation-adjusted dollars) that regulators would allow: $1,442. Today one can fly that same route for $268. That is why the number of travelers has gone way up.
To his credit, Breyer signals in the next paragraph that he?s not pushing for a return to the ?good old days? of much higher, regulated prices. But one does get the sense that he?s lukewarm about a valuable reform that has enabled millions to use airlines more regularly now than in the 1970s.