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> From the late 1930s through the ’70s, the federal government regulated airlines as a public utility. The Civil Aeronautics Board decided which airlines could

> From the late 1930s through the ’70s, the federal government regulated airlines as a public utility. The Civil Aeronautics Board decided which airlines could fly what routes and how much they could charge. It aimed to set prices that were fair for travelers and that would provide airlines with a modest profit. Then, in 1978, Congress passed a sweeping law deregulating the airline industry and ultimately abolishing the CAB. Unleashed from regulation, airlines devised new tactics to capture the market. That makes it sound like air travel was great before free markets stepped in. The real cost of air travel fell by about half since then. Before deregulation, there weren't as many competitive incentives, and airlines couldn't experiment with routes. Air travel became much more popular and got much safer (this might be a coincidence). Granted, service got worse, but you can still buy service at 2x the price in first class. People just don't. There are probably a bit too few customer and worker protections, but on the whole, airline deregulation shows just how bad command economies are at planning and allocating resources.

WalterBright 3y ago
> The Civil Aeronautics Board decided which airlines could fly what routes and how much they could charge In this era, it was commonplace to fly with only a few passengers aboard. Full flights were rare. Immediately after deregulation, the flights became routinely full. I.e. the airlines became far more efficient and served the flying public much better.
- riscy 3y ago
  that could only happen because of service reductions along routes. that gives the public fewer options for when they fly and makes them less comfortable being crammed into planes with ever tinier seats. doesn’t sound like a benefit to me. the benefits to society is in terms of reduced fuel consumption, only because that’s directly aligned with the airline’s profits.
  - WalterBright 3y ago
    The benefit to customers was the planes were directed to where the customers were and flew to where they wanted to go. There was not a sudden decrease in aircraft flying. > the benefits to society is in terms of reduced fuel consumption, only because that’s directly aligned with the airline’s profits Companies don't burn fuel for fun. The fuel is about 40% of the cost of your ticket. Increased fuel efficiency is the major driver of new airline designs.
    - autoexec 3y ago
      > The benefit to customers was the planes were directed to where the customers were and flew to where they wanted to go. FTA: "Worse still, without mandated service, cities and regions across the country have lost commercial air service" It sounds like planes stopped being directed to where customers were and no longer fly to where they wanted to go in many instances. This is not a win for the consumer.
      - twoodfin 3y ago
        Planes stopped being directed where Congressmen wanted them to fly.
        autoexec 3y ago
        Congressmen who are elected to represent the will of the people and serve in their interests. I'll take that over the airlines who serve only themselves and whose only motivation is to take as much money from the public as possible.
        vxNsr 3y ago
        Right, because famously, politicians are totally selfless and never do anything self-serving.
        autoexec 3y ago
        When are aren't doing their job to our liking, we have the ability to remove them and replace them. Try doing that with the CEO of an airline.
  - LudwigNagasena 3y ago
    > the benefits to society is … only because that’s directly aligned with … profits. Yeah, that’s the magic of capitalism. You make society more efficient and get paid for that. You say that being crammed into planes isn’t a benefit. But the opportunity costs should be taken into account. Every resource not spent on airlines is a resource spent on something else.
    - WalterBright 3y ago
      Airplanes crammed full of people are a lot more fuel efficient per passenger than one mostly empty.
    - riscy 3y ago
      there is no magic to capitalism, only greed. when that aligns with your definition of efficiency it’s a coincidence. capitalism can also be very harmful and inefficient for society. companies draining aquifers and producing tons of disposable plastic bottles to sell people that water for profits is a net negative for modern society. that money should go towards improving our water infrastructure so no one feels that their water is unclean. so much plastic pollution is the result of capitalism too.
      - nickpp 3y ago
        > here is no magic to capitalism, only greed It certainly was magical after the fall of communism in Eastern Europe to be able to visit capitalist countries and wonder at the shelves full of products and the countless affordable offers. Starving under communism on the other hand was not magical at all. We were told incessantly that we were making the world a better place, improving the society unlike the evil capitalism that was destroying everything - but we were starving. Funny enough the capitalist countries looked better and were less polluted too. Turns out rich societies tend to care more about the environment and invest accordingly too.
        riscy 3y ago
        i never implied communism is the answer. the world is not black and white.
  - jabroni_salad 3y ago
    It also happened because airlines were suddenly allowed to offer discounts to fill seats as the takeoff date approached. That practice did not exist during the pricefix era.
aradox66 3y ago
40 years is a long time, there's not really a viable counterfactual here
ierjtilawj 3y ago
Did you read the entire article? Or just the beginning? > After a relatively short period of fierce competition, the deregulated era quickly turned to consolidation and cost-cutting, as dozens of airlines either went bankrupt or were acquired. > Deregulation even failed to deliver the one thing it is sometimes credited with: lowering prices. Airfare did get cheaper in the years after the 1978 deregulation law. But the cost of flying had already been falling before deregulation, and it kept falling after at about the same rate.
- adamisom 3y ago
  > But the cost of flying had already been falling before deregulation, and it kept falling after at about the same rate. What a bizarre argument, that absolutely demands more examination than a throwaway line upon which the entire premise of the piece hinges. There’s lots of reasons why fares would be falling in the early days that you wouldn’t expect to continue for decades. Yet the author seems content to pretend there’s some mysterious factor that causes prices to fall for decades that we can infer from just a few year’s data. From first principles, you should always expect that regulation increases prices and the burden of proof is to argue why it would not. Embarrassing that the author is a professor and didn’t bother making a proper argument. A key argument that led to deregulators winning is showing that intra-state fares—which were not federally regulated—were about 40% cheaper than one might expect when comparing to interstate. Anyway, there are articles that go into various reasons why deregulation very probably substantially decreases fares.
  - deleted 3y ago
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  - pyrolistical 3y ago
    > From first principles, you should always expect that regulation increases prices and the burden of proof is to argue why it would not I don’t see how that is true.
    - sdvnwsdf 3y ago
gota 3y ago
Minor point - is first class 2x only? My recent experience with international flights indicates that business class is 5x of the premium economy seats, which are 1.5x already
- logifail 3y ago
  > My recent experience with international flights indicates that business class is 5x of the premium economy seats, which are 1.5x already If you were to buy the cheapest (non-flexible) business class fare many months in advance, you might well get it for significantly less than a flexible economy fare sold one week before departure. Also note that airlines price on origin and destination, indirect (connecting) flights typically cost less than direct, so if you want to fly from London to New York, in business class, it's almost certainly going to be cheaper to fly somewhere else and to start your journey (and fare) from there, and fly _via London_ to NYC. Specifically you'd fly first to Dublin (or Oslo, or Budapest, or ...), then turn around and fly DUB/OSL/BUD-LON-NYC-LON-DUB/OSL/BUD. Airline pricing can be very, very counter-intuitive to the uninitiated. (Source: have paid for 20+ business class flights in the last 12 months, none of which were what I'd call expensive, as I despite being a miles collector I am fairly price sensitive. Just as happy to fly with Ryanair or Easyjet when value for money is to be found there)
  - Tangurena2 3y ago
    Prices are also different based on the language you use on the airlines website. US to EU prices tend to be different if you use the carrier's native language vs English.
    - closewith 3y ago
      That would be unlawful in every country in the EU (price discrimination based on a proxy of the nationality protected characteristic).
      - yeahboats 3y ago
        It would not be as long as they were accessible to everyone. > However, traders may still set different net sale prices in different points of sale, such as shops and websites, or may target specific offers only to a specific territory within a Member State. Under EU rules, all these offers must be accessible for consumers from other EU countries. They are not allowed to redirect you without your consent, and you must also be able to change location at any time. >Where a trader has several country versions of the same website, such as a webshop selling products to different countries across the EU, you should be able to choose to view which version you visit. You must give your permission to be redirected to a specific country version of the website. You should also be able to change your choice at any time. https://europa.eu/youreurope/citizens/consumers/unfair-treatment/unfair-pricing/index_en.htm https://europa.eu/youreurope/citizens/consumers/unfair-treat...
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AtlasBarfed 3y ago
We're going to pretend that airplanes haven't vastly improved in efficiency and design in 40 years? Or that there isn't effectively cartel economics in play in the market? That ticketing / checkin automation / business execution efficiency wasn't vastly increased by information technology? And the bailouts that airlines get. Just constant bailouts. I will grant you heavy regulation of the 1970s was a price inefficiency. But I'd need some representation of cartel market/regulatory capture price inefficiency of the current situation to compare. I suspect it isn't that much. Fuel costs are probably higher, but engine and plane design efficiencies should have overcome that. IT should be a huge amount of efficiency in operations, at least 20% of the former cost. Then we look at how worse service is now and how much more cramming / leg room reduction, fees, etc. I'd have to know if you "ticket costs half in real dollars" figure includes basic "user fees" or not. Here's Robert Reich on airline travel: https://www.youtube.com/watch?v=eTzaMXXelew https://www.youtube.com/watch?v=eTzaMXXelew Yes, the liberals favority economist. But I agree with his fundamental arguments about modern air travel and the oligarchical / cartel nature of virtually all of our markets for goods and services.
- cratermoon 3y ago
  > IT should be a huge amount of efficiency in operations, at least 20% of the former cost. I doubt anyone who has worked as a programmer in the industry, myself included, would say that IT is hugely more efficient. The majority of the commercial passenger airline industry still revolves around Sabre: created in 1960 by American Airlines and still, to this day, unable to handle text with diacritics or non-roman alphabets. Everything is wrappers and layers around Sabre, and Sabre charges for every transaction. In an efficient market, Sabre would have disappeared after deregulation. Instead, more and more airlines signed on.
tech_ken 3y ago
> There are probably a bit too few customer and worker protections, but on the whole, airline deregulation shows just how bad command economies are at planning and allocating resources. Isn't each individual airline is itself a command economy, internally? Many large companies manage their assets centrally, for example Kroger or any other large grocery chain manages itself via central planning. Would they function more profitably if individual store managers were bidding to "purchase" groceries from the central supplier? The only datapoint I know of is Sears, which tried something similar and went down in flames
- bpodgursky 3y ago
  > Isn't each individual airline is itself a command economy, internally Yes. The difference is that an "airline command economy" collapsing from incompetence is an uneventful bankruptcy, and a national command economy collapsing means civil war and anarchy.
  - tech_ken 3y ago
    That's a trivially true statement for any descriptor which can be applied to both a business and a nation? National economic collapse generally means civil war and anarchy in almost any case.
    - mcmoor 3y ago
      Nation is like "too big to fail" businesses and both are bad because of this. Free market system requires everyone to be able to be eliminated from the competition. Although sometimes I imaged UBI to instead enhance free market because it allows every person to contribute to the competition and can still fail gracefully. Instead poor person is now also "too big to fall" because they're betting their livelihood for each proposal.
- lucas_membrane 3y ago
  But Sears gave Donald Rumsfeld a lifetime discount card. Which brings us to the major government subsidy of US airlines. People work for airlines at reduced wages to have available very great discounts on their personal travel, totally untaxed. Live wherever you want, and commute on the airline! Second major subsidy is that people who pay or have their employers pay for airline tickets as deductible business expenses manage to use their kickbacks (free flights for repeat customers) for personal travel untaxed. Eliminate those subsidies and watch what happens.
HAL3000 3y ago
It's funny how this is a top comment while it's completely false in this particular case, which you can read about further down in the article.
rrrrrrrrrrrryan 3y ago
> airline deregulation shows just how bad command economies are at planning and allocating resources. I'm curious why folks think the failure of command economies in the pre-digital era carries any weight today. We have orders of magnitude more data today, and I feel like it should (theoretically) be possible to use that data to optimize for things other than maximal profit.
- jklinger410 3y ago
  An overwhelming amount of propaganda fueled by private profits.
- twoodfin 3y ago
  What matters is the incentive structure (win, get profits!) and price signals (“Shut up and take money!”) provided by markets. Improving technology is downstream of those forces.
  - jjoonathan 3y ago
    The market wants more banks and fewer airlines.
    - twoodfin 3y ago
      Kinda? The era of technological or business innovation for large airlines may basically be over. If you take that bet you want the airline you invest in to focus on financial wheeling and dealing to ensure they save a few pennies on fuel in 2035 or earn a few more pennies on affiliate credit card spend in 2027.
      - jjoonathan 3y ago
        So you're admitting that innovation isn't downstream from market incentives in this case, but financial wheeling and dealing is. I'm glad we are on the same page.
        3y ago
wayfinder 3y ago
I wouldn't say airline regulation was a great exercise about command economies planning and allocating resources. The whole point of regulation was to keep prices up so the airlines wouldn't implode like rail did. It was not meant to keep prices down. So when we got rid of airline regulation, prices went down. Some airlines did implode, but not as badly as rail did. Thankfully for airlines, it seems flying is a lot more indispensable than riding by rail.
- jandrese 3y ago
  Airlines had the advantage of not having to compete with a shiny new industry the way rail did with airlines. I'm sure airlines would have suffered greatly had we developed cheap rocket power transport or high speed pneumatic tubes or some other zany sci-fi transport that left the airlines looking slow and overpriced. Rail in the US died because US cities are far enough apart that flying made a noticeable difference in travel times, unlike more compact countries. There's a reason Amtrak only works well in the relatively dense northeastern seaboard of the US. That said, the airline industry is one where competition seems to be working pretty well. It's a market success story. The most efficient market is one where everybody is making close to 0 profit, and that's a good description of the airline industry in the past few decades, especially when you focus on the relatively small part of the airline industry that deals with flying planes and their passengers.
- cryptonector 3y ago
  > Thankfully for airlines, it seems flying is a lot more indispensable than riding by rail. More like air routes are a lot cheaper to change than rails. Nor do air routes cost millions of dollars per-mile to build. And yes, jetliners are several times faster than trains, even bullet trains, and since rail networks are orders of magnitude more expensive than airline networks... The whole thing adds up to air travel being much much much cheaper and more convenient than rail with relatively few exceptions involving high population densities.
- cycomanic 3y ago
  > Thankfully for airlines, it seems flying is a lot more indispensable than riding by rail. I think a big aspect of this is that railway workers were much more unionized than airline ones. So what better way to kill the unions than to kill the industry.
gymbeaux 3y ago
1978 right before Carter was sworn in or right after? This doesn’t seem like something Carter would have signed.
- ls612 3y ago
  Deregulation in the 70s and 80s was strongly bipartisan, Carter signed all of the transportation (air and surface) deregulation acts.
dools 3y ago
> There are probably a bit too few customer and worker protections, but on the whole, airline deregulation shows just how bad command economies are at planning and allocating resources. I would say that it demonstrates that, where competition exists, deregulation can achieve some pretty good results. It's worth noting that consumers can choose which airline to fly every time they fly and the cost of switching is non-existent (absent loyalty programs which is why they're called loyalty programs). It's also worth noting that since airlines are pretty critical infrastructure, when there's an economic downturn and the government bails them out, the government is essentially subsidising the discounts of the previous 10 years and generally doesn't do it for the very small airlines that aren't too big to fail so it's also still a bit government-ish.
- arcticbull 3y ago
  Not to mention the government is still actively involved through programs like Essential Air Service [1] It wasn't fully deregulated and left alone, some aspects were deregulated. As usual people like to bucket government policy as black and white but in reality it's usually somewhere in the middle. [1] https://www.transportation.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service https://www.transportation.gov/policy/aviation-policy/small-...
- ls612 3y ago
  Airlines have also had really shitty luck as an industry, that isn't high margin to begin with, facing two exogenous near death experiences in 20 years with 9/11 and Covid.
  - faeriechangling 3y ago
    Airlines are just a terrible business. Massive fixed costs, massive variable costs, tons of regulation, tons of competition, constant bankruptcies, and the outlook for the industry only gets more grim. COVID is just a 1 in a hundred year event, terrorist attacks happened before and after 9/11. It’s a miracle that airlines are as functional as they are. People REALLY like flying.
JohnFen 3y ago
> Granted, service got worse, but you can still buy service at 2x the price in first class. People just don't. A lot worse. So bad that while I love to fly, I hate to fly on commercial airlines and avoid it when at all possible. Especially post-9/11. Some of the issues are mitigated by flying first class, but even that only makes it a bit more tolerable, but not enough to be worth the increased airfare.
ulfw 3y ago
We also got airplanes that are way cheaper to run, are more reliable, use less Kerosine and there's a lot more to be bought than back in the day. It's REALLY hard to compare anything 1973 vs 2023 as there are way more factors in play than just "oh it was X then and is Y now"
Nifty3929 3y ago
Really - most of the large, heavily regulated or government-owned industries I can think of have runaway prices and seem very inefficient. In some cases the government will also pay some or all of the price themselves. Education and healthcare come to mind. Can anybody think of an industry where government ownership leads to more efficiency and lower prices (including the amount the government pays)?
- MathMonkeyMan 3y ago
  I'm not looking for any numbers, so I don't know. One argument I've heard in favor of government-owned industry is for things that must be more or less guaranteed for everybody, regardless of capital. Drinking water, postal service, election management, and violence (police, national guard, military) come to mind. Those examples might be more efficient and affordable if privatized, but then it might be expensive or unreliable to get mail in Alaska, or there might be lawlessness near parts of the Mexican border, or elections might be fraudulent in some districts. Throwing tax dollars, laws, and bureaucracy at these things doesn't necessarily improve them, but maybe it raises the bottom, at considerable cost.
sharts 3y ago
>airline deregulation shows just how bad command economies are at planning and allocating resources. Huh? airline deregulation != command economies airline deregulation == free market This statement sounds like it should read: "airline deregulation shows just how bad laissez-faire economies are at planning and allocating resources"
- lukas099 3y ago
  No because their argument was that planning and allocation of resources were better post-deregulation.
mannyv 3y ago
Deregulation worked, but in a capitalistic society bigness has benefits. Rolling up your competitors has advantages, both from a financial and business point of view. The problem isn't deregulation, it's preserving competition.
Retric 3y ago
The drop in price has a great deal to do with improving technology not simply competition driving down prices and how little room people are willing to accept. An apples to apples comparison with equivalent legroom etc a domestic flight in 1970 was often cheaper than what people see today. The cheapest thickets on long haul flights have fallen significantly, but that’s also where technology has made the greatest strides with more efficient engines requiring less fuel and thus less weight which increases efficiency which then compounds on longer trips.
- nateabele 3y ago
  > The drop in price has a great deal to do with improving technology not simply competition driving down prices And this improved technology was an inevitable, foregone conclusion? People make arguments like this as if it was some passive thing, as opposed to thousands if not millions of conscious decisions to improve turbines, airframes, and myriad other technologies, then actually implement them in real aircraft, then acquire and deploy a commercial fleet. People made these decisions because they were incentivized to trade time and money today for material improvements tomorrow. Why do you think that might have been? Hint: think about industries where there isn't much competition. Do we see similar improvements there, usually?
  - fein 3y ago
    I don't really buy this premise at all > think about industries where there isn't much competition. Do we see similar improvements there, usually? I can't think of an industry without competition where said industry doesn't try to improve their product or production for more profit. Maybe something in the medical space that I'm unaware of, but this definitely doesn't fly for aviation or transportation in general.
    - quanto 3y ago
      > but this definitely doesn't fly for aviation or transportation in general. Precisely because those fields are in a high economic (and consequently technology) competition, you see innovation as you noted. The parent comment is that you cannot throw away the competition and still expect innovations to happen.
achenet 3y ago
from TFA: > Deregulation even failed to deliver the one thing it is sometimes credited with: lowering prices. Airfare did get cheaper in the years after the 1978 deregulation law. But the cost of flying had already been falling before deregulation, and it kept falling after at about the same rate.
listenallyall 3y ago
> you can still buy service at 2x the price in first class Writing this demonstrates you don't know what you're talking about. Plenty of people would happily pay double for a first-class seat but that's not nearly enough. At best paying double gets you into premium economy. Most domestic (USA) first class tickets are 3-5x the cost of an economy ticket. For international flights, business tends to be 3x and first class is something like 7x-10x.
- ExoticPearTree 3y ago
  I had to fly coast to coast in the US and I was pretty disappointed that for a 6hr+ flight you can't get a seat that turns into a bed even in first class. Especially on an overnight flight.

WalterBright 3y ago

> The Civil Aeronautics Board decided which airlines could fly what routes and how much they could charge In this era, it was commonplace to fly with only a few passengers aboard. Full flights were rare. Immediately after deregulation, the flights became routinely full. I.e. the airlines became far more efficient and served the flying public much better.

riscy 3y ago
that could only happen because of service reductions along routes. that gives the public fewer options for when they fly and makes them less comfortable being crammed into planes with ever tinier seats. doesn’t sound like a benefit to me. the benefits to society is in terms of reduced fuel consumption, only because that’s directly aligned with the airline’s profits.
- WalterBright 3y ago
  The benefit to customers was the planes were directed to where the customers were and flew to where they wanted to go. There was not a sudden decrease in aircraft flying. > the benefits to society is in terms of reduced fuel consumption, only because that’s directly aligned with the airline’s profits Companies don't burn fuel for fun. The fuel is about 40% of the cost of your ticket. Increased fuel efficiency is the major driver of new airline designs.
  - autoexec 3y ago
    > The benefit to customers was the planes were directed to where the customers were and flew to where they wanted to go. FTA: "Worse still, without mandated service, cities and regions across the country have lost commercial air service" It sounds like planes stopped being directed to where customers were and no longer fly to where they wanted to go in many instances. This is not a win for the consumer.
    - twoodfin 3y ago
      Planes stopped being directed where Congressmen wanted them to fly.
      - autoexec 3y ago
        Congressmen who are elected to represent the will of the people and serve in their interests. I'll take that over the airlines who serve only themselves and whose only motivation is to take as much money from the public as possible.
        vxNsr 3y ago
        Right, because famously, politicians are totally selfless and never do anything self-serving.
        autoexec 3y ago
        When are aren't doing their job to our liking, we have the ability to remove them and replace them. Try doing that with the CEO of an airline.
- LudwigNagasena 3y ago
  > the benefits to society is … only because that’s directly aligned with … profits. Yeah, that’s the magic of capitalism. You make society more efficient and get paid for that. You say that being crammed into planes isn’t a benefit. But the opportunity costs should be taken into account. Every resource not spent on airlines is a resource spent on something else.
  - WalterBright 3y ago
    Airplanes crammed full of people are a lot more fuel efficient per passenger than one mostly empty.
  - riscy 3y ago
    there is no magic to capitalism, only greed. when that aligns with your definition of efficiency it’s a coincidence. capitalism can also be very harmful and inefficient for society. companies draining aquifers and producing tons of disposable plastic bottles to sell people that water for profits is a net negative for modern society. that money should go towards improving our water infrastructure so no one feels that their water is unclean. so much plastic pollution is the result of capitalism too.
    - nickpp 3y ago
      > here is no magic to capitalism, only greed It certainly was magical after the fall of communism in Eastern Europe to be able to visit capitalist countries and wonder at the shelves full of products and the countless affordable offers. Starving under communism on the other hand was not magical at all. We were told incessantly that we were making the world a better place, improving the society unlike the evil capitalism that was destroying everything - but we were starving. Funny enough the capitalist countries looked better and were less polluted too. Turns out rich societies tend to care more about the environment and invest accordingly too.
      - riscy 3y ago
        i never implied communism is the answer. the world is not black and white.
- jabroni_salad 3y ago
  It also happened because airlines were suddenly allowed to offer discounts to fill seats as the takeoff date approached. That practice did not exist during the pricefix era.

aradox66 3y ago

40 years is a long time, there's not really a viable counterfactual here

ierjtilawj 3y ago

Did you read the entire article? Or just the beginning? > After a relatively short period of fierce competition, the deregulated era quickly turned to consolidation and cost-cutting, as dozens of airlines either went bankrupt or were acquired. > Deregulation even failed to deliver the one thing it is sometimes credited with: lowering prices. Airfare did get cheaper in the years after the 1978 deregulation law. But the cost of flying had already been falling before deregulation, and it kept falling after at about the same rate.

adamisom 3y ago
> But the cost of flying had already been falling before deregulation, and it kept falling after at about the same rate. What a bizarre argument, that absolutely demands more examination than a throwaway line upon which the entire premise of the piece hinges. There’s lots of reasons why fares would be falling in the early days that you wouldn’t expect to continue for decades. Yet the author seems content to pretend there’s some mysterious factor that causes prices to fall for decades that we can infer from just a few year’s data. From first principles, you should always expect that regulation increases prices and the burden of proof is to argue why it would not. Embarrassing that the author is a professor and didn’t bother making a proper argument. A key argument that led to deregulators winning is showing that intra-state fares—which were not federally regulated—were about 40% cheaper than one might expect when comparing to interstate. Anyway, there are articles that go into various reasons why deregulation very probably substantially decreases fares.
- deleted 3y ago
  [deleted]
- pyrolistical 3y ago
  > From first principles, you should always expect that regulation increases prices and the burden of proof is to argue why it would not I don’t see how that is true.
  - sdvnwsdf 3y ago

gota 3y ago

Minor point - is first class 2x only? My recent experience with international flights indicates that business class is 5x of the premium economy seats, which are 1.5x already

logifail 3y ago
> My recent experience with international flights indicates that business class is 5x of the premium economy seats, which are 1.5x already If you were to buy the cheapest (non-flexible) business class fare many months in advance, you might well get it for significantly less than a flexible economy fare sold one week before departure. Also note that airlines price on origin and destination, indirect (connecting) flights typically cost less than direct, so if you want to fly from London to New York, in business class, it's almost certainly going to be cheaper to fly somewhere else and to start your journey (and fare) from there, and fly _via London_ to NYC. Specifically you'd fly first to Dublin (or Oslo, or Budapest, or ...), then turn around and fly DUB/OSL/BUD-LON-NYC-LON-DUB/OSL/BUD. Airline pricing can be very, very counter-intuitive to the uninitiated. (Source: have paid for 20+ business class flights in the last 12 months, none of which were what I'd call expensive, as I despite being a miles collector I am fairly price sensitive. Just as happy to fly with Ryanair or Easyjet when value for money is to be found there)
- Tangurena2 3y ago
  Prices are also different based on the language you use on the airlines website. US to EU prices tend to be different if you use the carrier's native language vs English.
  - closewith 3y ago
    That would be unlawful in every country in the EU (price discrimination based on a proxy of the nationality protected characteristic).
    - yeahboats 3y ago
      It would not be as long as they were accessible to everyone. > However, traders may still set different net sale prices in different points of sale, such as shops and websites, or may target specific offers only to a specific territory within a Member State. Under EU rules, all these offers must be accessible for consumers from other EU countries. They are not allowed to redirect you without your consent, and you must also be able to change location at any time. >Where a trader has several country versions of the same website, such as a webshop selling products to different countries across the EU, you should be able to choose to view which version you visit. You must give your permission to be redirected to a specific country version of the website. You should also be able to change your choice at any time. https://europa.eu/youreurope/citizens/consumers/unfair-treatment/unfair-pricing/index_en.htm https://europa.eu/youreurope/citizens/consumers/unfair-treat...

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AtlasBarfed 3y ago

We're going to pretend that airplanes haven't vastly improved in efficiency and design in 40 years? Or that there isn't effectively cartel economics in play in the market? That ticketing / checkin automation / business execution efficiency wasn't vastly increased by information technology? And the bailouts that airlines get. Just constant bailouts. I will grant you heavy regulation of the 1970s was a price inefficiency. But I'd need some representation of cartel market/regulatory capture price inefficiency of the current situation to compare. I suspect it isn't that much. Fuel costs are probably higher, but engine and plane design efficiencies should have overcome that. IT should be a huge amount of efficiency in operations, at least 20% of the former cost. Then we look at how worse service is now and how much more cramming / leg room reduction, fees, etc. I'd have to know if you "ticket costs half in real dollars" figure includes basic "user fees" or not. Here's Robert Reich on airline travel: https://www.youtube.com/watch?v=eTzaMXXelew https://www.youtube.com/watch?v=eTzaMXXelew Yes, the liberals favority economist. But I agree with his fundamental arguments about modern air travel and the oligarchical / cartel nature of virtually all of our markets for goods and services.

cratermoon 3y ago
> IT should be a huge amount of efficiency in operations, at least 20% of the former cost. I doubt anyone who has worked as a programmer in the industry, myself included, would say that IT is hugely more efficient. The majority of the commercial passenger airline industry still revolves around Sabre: created in 1960 by American Airlines and still, to this day, unable to handle text with diacritics or non-roman alphabets. Everything is wrappers and layers around Sabre, and Sabre charges for every transaction. In an efficient market, Sabre would have disappeared after deregulation. Instead, more and more airlines signed on.

tech_ken 3y ago

> There are probably a bit too few customer and worker protections, but on the whole, airline deregulation shows just how bad command economies are at planning and allocating resources. Isn't each individual airline is itself a command economy, internally? Many large companies manage their assets centrally, for example Kroger or any other large grocery chain manages itself via central planning. Would they function more profitably if individual store managers were bidding to "purchase" groceries from the central supplier? The only datapoint I know of is Sears, which tried something similar and went down in flames

bpodgursky 3y ago
> Isn't each individual airline is itself a command economy, internally Yes. The difference is that an "airline command economy" collapsing from incompetence is an uneventful bankruptcy, and a national command economy collapsing means civil war and anarchy.
- tech_ken 3y ago
  That's a trivially true statement for any descriptor which can be applied to both a business and a nation? National economic collapse generally means civil war and anarchy in almost any case.
  - mcmoor 3y ago
    Nation is like "too big to fail" businesses and both are bad because of this. Free market system requires everyone to be able to be eliminated from the competition. Although sometimes I imaged UBI to instead enhance free market because it allows every person to contribute to the competition and can still fail gracefully. Instead poor person is now also "too big to fall" because they're betting their livelihood for each proposal.
lucas_membrane 3y ago
But Sears gave Donald Rumsfeld a lifetime discount card. Which brings us to the major government subsidy of US airlines. People work for airlines at reduced wages to have available very great discounts on their personal travel, totally untaxed. Live wherever you want, and commute on the airline! Second major subsidy is that people who pay or have their employers pay for airline tickets as deductible business expenses manage to use their kickbacks (free flights for repeat customers) for personal travel untaxed. Eliminate those subsidies and watch what happens.

HAL3000 3y ago

It's funny how this is a top comment while it's completely false in this particular case, which you can read about further down in the article.

rrrrrrrrrrrryan 3y ago

> airline deregulation shows just how bad command economies are at planning and allocating resources. I'm curious why folks think the failure of command economies in the pre-digital era carries any weight today. We have orders of magnitude more data today, and I feel like it should (theoretically) be possible to use that data to optimize for things other than maximal profit.

jklinger410 3y ago
An overwhelming amount of propaganda fueled by private profits.
twoodfin 3y ago
What matters is the incentive structure (win, get profits!) and price signals (“Shut up and take money!”) provided by markets. Improving technology is downstream of those forces.
- jjoonathan 3y ago
  The market wants more banks and fewer airlines.
  - twoodfin 3y ago
    Kinda? The era of technological or business innovation for large airlines may basically be over. If you take that bet you want the airline you invest in to focus on financial wheeling and dealing to ensure they save a few pennies on fuel in 2035 or earn a few more pennies on affiliate credit card spend in 2027.
    - jjoonathan 3y ago
      So you're admitting that innovation isn't downstream from market incentives in this case, but financial wheeling and dealing is. I'm glad we are on the same page.
      - 3y ago

wayfinder 3y ago

I wouldn't say airline regulation was a great exercise about command economies planning and allocating resources. The whole point of regulation was to keep prices up so the airlines wouldn't implode like rail did. It was not meant to keep prices down. So when we got rid of airline regulation, prices went down. Some airlines did implode, but not as badly as rail did. Thankfully for airlines, it seems flying is a lot more indispensable than riding by rail.

jandrese 3y ago
Airlines had the advantage of not having to compete with a shiny new industry the way rail did with airlines. I'm sure airlines would have suffered greatly had we developed cheap rocket power transport or high speed pneumatic tubes or some other zany sci-fi transport that left the airlines looking slow and overpriced. Rail in the US died because US cities are far enough apart that flying made a noticeable difference in travel times, unlike more compact countries. There's a reason Amtrak only works well in the relatively dense northeastern seaboard of the US. That said, the airline industry is one where competition seems to be working pretty well. It's a market success story. The most efficient market is one where everybody is making close to 0 profit, and that's a good description of the airline industry in the past few decades, especially when you focus on the relatively small part of the airline industry that deals with flying planes and their passengers.
cryptonector 3y ago
> Thankfully for airlines, it seems flying is a lot more indispensable than riding by rail. More like air routes are a lot cheaper to change than rails. Nor do air routes cost millions of dollars per-mile to build. And yes, jetliners are several times faster than trains, even bullet trains, and since rail networks are orders of magnitude more expensive than airline networks... The whole thing adds up to air travel being much much much cheaper and more convenient than rail with relatively few exceptions involving high population densities.
cycomanic 3y ago
> Thankfully for airlines, it seems flying is a lot more indispensable than riding by rail. I think a big aspect of this is that railway workers were much more unionized than airline ones. So what better way to kill the unions than to kill the industry.

gymbeaux 3y ago

1978 right before Carter was sworn in or right after? This doesn’t seem like something Carter would have signed.

ls612 3y ago
Deregulation in the 70s and 80s was strongly bipartisan, Carter signed all of the transportation (air and surface) deregulation acts.

dools 3y ago

> There are probably a bit too few customer and worker protections, but on the whole, airline deregulation shows just how bad command economies are at planning and allocating resources. I would say that it demonstrates that, where competition exists, deregulation can achieve some pretty good results. It's worth noting that consumers can choose which airline to fly every time they fly and the cost of switching is non-existent (absent loyalty programs which is why they're called loyalty programs). It's also worth noting that since airlines are pretty critical infrastructure, when there's an economic downturn and the government bails them out, the government is essentially subsidising the discounts of the previous 10 years and generally doesn't do it for the very small airlines that aren't too big to fail so it's also still a bit government-ish.

arcticbull 3y ago
Not to mention the government is still actively involved through programs like Essential Air Service [1] It wasn't fully deregulated and left alone, some aspects were deregulated. As usual people like to bucket government policy as black and white but in reality it's usually somewhere in the middle. [1] https://www.transportation.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service https://www.transportation.gov/policy/aviation-policy/small-...
ls612 3y ago
Airlines have also had really shitty luck as an industry, that isn't high margin to begin with, facing two exogenous near death experiences in 20 years with 9/11 and Covid.
- faeriechangling 3y ago
  Airlines are just a terrible business. Massive fixed costs, massive variable costs, tons of regulation, tons of competition, constant bankruptcies, and the outlook for the industry only gets more grim. COVID is just a 1 in a hundred year event, terrorist attacks happened before and after 9/11. It’s a miracle that airlines are as functional as they are. People REALLY like flying.

JohnFen 3y ago

> Granted, service got worse, but you can still buy service at 2x the price in first class. People just don't. A lot worse. So bad that while I love to fly, I hate to fly on commercial airlines and avoid it when at all possible. Especially post-9/11. Some of the issues are mitigated by flying first class, but even that only makes it a bit more tolerable, but not enough to be worth the increased airfare.

ulfw 3y ago

We also got airplanes that are way cheaper to run, are more reliable, use less Kerosine and there's a lot more to be bought than back in the day. It's REALLY hard to compare anything 1973 vs 2023 as there are way more factors in play than just "oh it was X then and is Y now"

Nifty3929 3y ago

Really - most of the large, heavily regulated or government-owned industries I can think of have runaway prices and seem very inefficient. In some cases the government will also pay some or all of the price themselves. Education and healthcare come to mind. Can anybody think of an industry where government ownership leads to more efficiency and lower prices (including the amount the government pays)?

MathMonkeyMan 3y ago
I'm not looking for any numbers, so I don't know. One argument I've heard in favor of government-owned industry is for things that must be more or less guaranteed for everybody, regardless of capital. Drinking water, postal service, election management, and violence (police, national guard, military) come to mind. Those examples might be more efficient and affordable if privatized, but then it might be expensive or unreliable to get mail in Alaska, or there might be lawlessness near parts of the Mexican border, or elections might be fraudulent in some districts. Throwing tax dollars, laws, and bureaucracy at these things doesn't necessarily improve them, but maybe it raises the bottom, at considerable cost.

sharts 3y ago

>airline deregulation shows just how bad command economies are at planning and allocating resources. Huh? airline deregulation != command economies airline deregulation == free market This statement sounds like it should read: "airline deregulation shows just how bad laissez-faire economies are at planning and allocating resources"

lukas099 3y ago
No because their argument was that planning and allocation of resources were better post-deregulation.

mannyv 3y ago

Deregulation worked, but in a capitalistic society bigness has benefits. Rolling up your competitors has advantages, both from a financial and business point of view. The problem isn't deregulation, it's preserving competition.

Retric 3y ago

The drop in price has a great deal to do with improving technology not simply competition driving down prices and how little room people are willing to accept. An apples to apples comparison with equivalent legroom etc a domestic flight in 1970 was often cheaper than what people see today. The cheapest thickets on long haul flights have fallen significantly, but that’s also where technology has made the greatest strides with more efficient engines requiring less fuel and thus less weight which increases efficiency which then compounds on longer trips.

nateabele 3y ago
> The drop in price has a great deal to do with improving technology not simply competition driving down prices And this improved technology was an inevitable, foregone conclusion? People make arguments like this as if it was some passive thing, as opposed to thousands if not millions of conscious decisions to improve turbines, airframes, and myriad other technologies, then actually implement them in real aircraft, then acquire and deploy a commercial fleet. People made these decisions because they were incentivized to trade time and money today for material improvements tomorrow. Why do you think that might have been? Hint: think about industries where there isn't much competition. Do we see similar improvements there, usually?
- fein 3y ago
  I don't really buy this premise at all > think about industries where there isn't much competition. Do we see similar improvements there, usually? I can't think of an industry without competition where said industry doesn't try to improve their product or production for more profit. Maybe something in the medical space that I'm unaware of, but this definitely doesn't fly for aviation or transportation in general.
  - quanto 3y ago
    > but this definitely doesn't fly for aviation or transportation in general. Precisely because those fields are in a high economic (and consequently technology) competition, you see innovation as you noted. The parent comment is that you cannot throw away the competition and still expect innovations to happen.

achenet 3y ago

from TFA: > Deregulation even failed to deliver the one thing it is sometimes credited with: lowering prices. Airfare did get cheaper in the years after the 1978 deregulation law. But the cost of flying had already been falling before deregulation, and it kept falling after at about the same rate.

listenallyall 3y ago

> you can still buy service at 2x the price in first class Writing this demonstrates you don't know what you're talking about. Plenty of people would happily pay double for a first-class seat but that's not nearly enough. At best paying double gets you into premium economy. Most domestic (USA) first class tickets are 3-5x the cost of an economy ticket. For international flights, business tends to be 3x and first class is something like 7x-10x.

ExoticPearTree 3y ago
I had to fly coast to coast in the US and I was pretty disappointed that for a 6hr+ flight you can't get a seat that turns into a bed even in first class. Especially on an overnight flight.