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Airline Deregulation - International Experiences.

Anyone wanting a summary of airline deregulation could scarcely find a more informative book. The publication covers Canada, the U.S., Australia, and Western Europe. The editor of the volume and author of the section dealing with Europe is Kenneth Button, professor of applied economics and transport at Loughborough University in the U.K. Peter Forsyth, of the Australian National University, provided the section on his country; Donald Pickrell, of the U.S. experience; and a trio of Tae Oum, William Stanbury, and Michael Tretheway, of the University of British Columbia, took care of the record of Canada.

The parallels, as well as the variances of airline regulation, are covered without undue detail but excellent documentation. So much dynamism is present that what is true today may only be quite temporary. The nations differ greatly and thus the operations of the airlines, as well as their controls, had to be tailored. Canada and Australia clearly show great similarities and wound up with two airline systems--one line governmentally owned and the other private until privatization came into vogue. Each nation had great distances, the relatively limited population concentrated in major cities. Each had the problem of relationship of domestic transport of international, and the solutions were not greatly different.

The coverage of the deregulation movement in the United States was comprehensive as well as judicious. This section of the book was written some time ago. Changes have ensued with new implications. We have lost more airlines and are on the threshold of additional bankruptcies as well as discontinuances. We are still in the shakedown period, which may result in as few as six airlines. The author called attention to the concentration of business in single companies at many of the hubs in the U.S. The extent of monopolistic competition is beyond what might be implied from a count of the number of airlines still operative. Pickrell covered the advantages possessed by major carriers, both through the booking arrangements through travel agents and the control of slots at the increasingly congested airports.

Many of the statistics on air fares in recent years are somewhat misleading and the service to consumers is sometimes greatly different in quality than in the past. The new wide-bodied planes have narrow-bodied seats. This was epitomized when a Minneapolis paper, which had carried stories on the discontinuance of smoking on short flights, announced that there would not be toilets on short flights on a well known airline. Supposedly, this enabled the company to have a few more seats. Faster planes did avert the necessity for meals but, on the other hand, on many flights the meals were compared to servings of quality which the reviewer will not detail. The introduction of the hub system has had all of the advantages for the airlines as outlined in the book. On the other hand, the service to smaller cities has disappeared or, in many cases, deteriorated. The city of the reviewer had seven flights a day to Chicago before deregulation and subsequently none. This was similar for other cities in the Midwest with populations of 50,000 to 150,000. Major cities which were not hubs discovered that their routings entailed fewer direct flights; thus the lengthy mileage rolled up as the result of routings through hubs may well have made the revenue per seat mile for the airline far lower, but the number of miles so much greater that the passenger wondered about whether he or she was better off. More significant to consumers was the great increase in the cost of air flights as a result of commuting by car for distances of fifty to seventy-five miles and leaving the car in progressively higher-priced parking lots, which made the cost of travel substantially greater than in days gone by. Finally, the pricing of the trips embodies discrimination incredibly great in relation to the more moderate discrimination that led to railroad control in the last century. Consumers who wish to travel between hubs where there is a semblance of competition and who have flexibility when they travel swarm our airlines and make the statistics look extraordinarily good. Those whose locations are not so favorable or who must fly on the spur of the moment or short notice may find their cost exorbitant. Many companies have been forced by the alleged benefits of deregulation to rely more on telephone conferences and car rentals to avoid the high charges of air travel for executives and various management personnel.

Any close observer of the airline industry in the U.S. in recent years can see why the frequent flier programs came into being and also may know of the extent to which this has sometimes brought out the worst aspects of human behavior through temptation in the routing practices of many individuals to secure the access to free flights. Anyone who has had experience in the travel agency business is acutely aware of rather widespread abuse.

Change is occurring so rapidly that it is necessary to look at what may be in store if there is a further reduction in the number of carriers. If the shakedown continues much more, as is likely, the various carriers will then be in a position to behave far more like the monopolists. Competition is going to be a sporadic thing. We can only hope for enlightened and benevolent leadership under these conditions of monopolistic or oligopolistic circumstances. The situation is especially complex in Europe, with the role of nationalism growing in an area where there are the forces of unification of the Common Market. Ethnic policies may be on a collision course with business.

Read Airline Deregulation if you want an excellent base of information for understanding the rapid evolution of the industry and its services in the immediate years to come.

L. L. Waters, FM-AST&L Professor Emeritus of Transportation Indiana University Bloomington, Indiana 47405
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Author:Waters, L.L.
Publication:Transportation Journal
Article Type:Book Review
Date:Jun 22, 1992
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