The U.S. Airline Deregulation Act of 1978 was sold to Congress and travelers as a way to reduce passenger fares and increase airline productivity.
It succeeded in cutting fares, at least for people who know how to find bargains. But it failed in so many other ways that its overall value has come into question.
Last week, the U.S. Senate approved a bill that's a product of deregulation -- a product of what can happen when airline companies offer their customers such good deals that they go bankrupt. The measure gives Northwest and Delta airlines 17 years to save their failing pension plans. Continental and American were given 10 years to restore their failed plans.
This is an industry that's incapable of making good business decisions. Carriers have offered wages and benefits that can't be covered by ticket sales. Yet they continue to sell heavily discounted tickets. That's great for passengers until airlines can't meet their financial obligations. Then taxpayers face the prospect of picking up airline pension costs via the government-funded Pension Benefit Guaranty Corp., which is where this mess still could land if airlines don't rewrite their business models.
Did airline deregulation serve us well? Not if we saved money in one hand only to hand it back from another.
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Congress should look beyond a stop-gap reaction to a single aspect of the airline mess. Even given 17 years, there's no guarantee carriers will refund their failed pension plans. Other than reducing costs, routes and services, there's no indication they'll set fares high enough so revenues exceed expenses.
There are very few cases in which government regulation creates a better business environment than an open market, but this just might be one of them.
