The Phaserl


Dr. Dao Was Brutalized By Deregulation

by Paul Craig Roberts, Paul Craig Roberts:

A couple of readers asked why I did not include in my column, “A Government of Morons,” the violence used against the medical doctor Dao removed from his confirmed seat on a United Flight as a result of airline overbooking. The 69-year old was beat senseless by goons. A few days later United Airlines removed a bridal couple on the way to their wedding from a flight only partially filled. No explanation was given, but the couple wary of the beating that might be heading their way complied with the order.

Clearly United is an airline you want to stay far away from. Clearly, the flight attendants have no sense or judgment. Clearly “security” means the opposite.

The answer to the readers’ question is that I was writing a column, not a monograph or a book or a long essay. One doesn’t need endless examples in order to make a point. Yes, the treatment of Dr. Dao is a good example that America’s only solution is violence, but so is two cops shooting down a 12-year old kid playing in a public park.

Thinking about Dr. Dao’s brutalization by United Airlines, I have concluded that it follows from airline deregulation. Those whose experience of airline travel is limited to the deregulated era have no idea how superior the experience was under regulation. What deregulation has done is to force everything down to the bottom line. Nothing else is important.

In the regulated era, flights were not overbooked. Flights are overbooked today because the airlines want every seat filled and assume that some passengers won’t show up. When they all show up, there is a problem.

In the regulated era, service was excellent. Even coach passengers were served hot meals if their flights coincided with meal times.

There were spare parts and mechanics on hand and even spare airplanes. If your airline could not get you to your destination on one of their aircraft, you could use your ticket on any other airline.

If you could not make your flight, your ticket was fully refundable.

You could change your plans and rebook for a later or sooner departure without charge. Today change charges can approach the ticket’s purchase price.

On international flights you were allowed three free stopovers at no extra charge.

I could go on.

This outstanding service was possible because the airlines were regulated. Consequently, the airlines competed on service.

Costs were not a factor like they are today, because profits were part of the regulation. To have mechanics and parts inventories on hand at airports and a spare airliner did not mean that Wall Street would finance a takeover and drive up profits by eliminating service components. You can think of airline fares in the regulated era as a profit added to the cost of service. The Civil Aeronautics Board guaranteed airlines a 12 percent profit on flights that were 55 percent full. To achieve a 55 percent capacity utilization, the CAB regulated routes and partialed out the routes to the airlines.

In 1978 all of this changed. Free market deregulators and leading political liberals claimed that deregulation would increase competition, lower fares and “democratize” the system by permitting more people to fly to their destinations. However, the consequence of deregulation was concentration. Today four airlines control 85% of the market. A single airline can gain control over a major airport and thereby gain control over pricing out of the hub. We now have unregulated monopoly pricing. Average prices are higher today than they would be under the former regulatory system.

Indeed, I know of no instance in which deregulation produced a better result. Under regulated AT&T, telephone service was excellent at a very low price. Compare today the poor service and high price for the unregulated local or regional monopoly.

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1 comment to Dr. Dao Was Brutalized By Deregulation

  • Rdawg

    WTF? The guy that often writes about a government out of control wants…more governmental control.

    And as for telephone service, what is PCR smoking? I remember as a kid that making a long-distance call (like across the state) was a big deal because of the cost. Who even thinks twice about long distance calls anymore?

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