Taking Flight

Hardly a few days went by this summer without some media mention of the commercial airline industry and what shambles it is in.

Hoping to engage and enrage everyday travelers, print and television outlets told horror stories of how a contract dispute among United Airlines pilots was wreaking havoc with business and pleasure flyers alike. Those reports were most often followed by warnings that the U.S. aviation industry--currently being pushed to its operational limits--could only get worse from here on in.

While there is some truth in the warnings--the air transportation sector does have serious problems that it must address--the doomsday predictions are far too gloomy. In fact, almost 22 years since the U.S. airline industry was deregulated, it is by far the best time to be a frequent flyer--particularly if you are young.

Thanks to the Internet and to the huge growth in the industry since deregulation, air travelers can fly to more places, more safely and more cheaply now than ever before in our nation's history.

The 1978 decision to bring competition to the market started this ball rolling. Today's commercial airline marketplace contrasts dramatically with the industry when it was still regulated by the government. Then, federal regulators told the airlines what airports they could serve and with what frequency. The fares they could offer were also left up to government control, leaving the airline companies to compete for business based on the type of service that they offered.

Now, airlines have significantly more (though not complete) freedom to chose where they fly and they compete more vigorously (although not perfectly) for their customers based on fares, service and frequent flyer programs. You may not take the same route, but if you want to fly from Boston to London, there are plenty of air carriers fighting for your business. What's more, deregulation has spurred huge efficiency gains in the market.

But in terms of benefits to flyers, the Internet is revolutionizing the way we travel just as radically as deregulation itself. The creation of several self-service on-line travel agencies has given consumers a tremendous new power to search for low fares and select different types of airline flights. And the success of two of the more established on-line travel sites, travelocity.com and expedia.com, has further paved the way for myriad other websites that allow users to search for low plane fares in any number of ways. Sites such as priceline.com even allow consumers to bid for surplus seats, while most of the major airlines sell bargain basement "e-saver" fares through their websites and e-mail databases.

The result is that travelers who are Internet savvy and have semi-flexible schedules (a.k.a. college students) are huge winners. Using just one or two different sites can provide a consumer with several possible flights; using three or four websites will almost certainly come up with the lowest fare. Even flying with little advance notice need not cost the astronomical amounts it once did.

But what's more, flyers with flexible schedules can also reap potentially significant savings by flying into or out of "alternate" airports. For example, air travelers in the Boston area can save significant amounts of money by avoiding Logan Airport. T. F. Green Airport in Providence (which is home to low-cost carrier Southwest Airlines) and even Worcester Airport offer service to popular destinations--often at significantly lower cost and with less aggravation.

As airlines, and particularly start-ups, look for ways to compete and be more efficient, these alternate airports will see vastly expanded service. In Chicago, Dallas and Detroit alone, secondary airports are beginning to provide travelers with viable and typically less expensive airline service options.

Finally, flyers in the U.S. are benefiting from flying in the world's safest airline environment. With hundreds of millions of passengers carried in a single year alone, an air traveler in the U.S. can rest assured that his or her chance of dying in a plane crash is significantly lower than while performing normal daily tasks.

To ensure that conditions stay as favorable for young, flexible travelers (as well as the rest of the flying public) more still must be done. The government must be particularly vigilant of monopolistic conditions at certain hub airports where the hub carrier frequently controls a majority of the flight slots. To do this, the Department of Transportation must not only open slots for start-ups and solid competitors at congested airports, but it must also do what it can to support new entrants. Just last week, for example, the federal government mysteriously denied Shuttle America, a new airline operating out of Hanscom Field in Bedford, the right to fly to LaGuardia Airport in New York City. This type of move not only hurts the start-up company, but also cheats consumers out of an affordable and convenient service.

The Federal Aviation Administration (FAA) too must work harder to find a way to update an aging air traffic control system. The delays that have plagued the system this summer are nothing more than a result of the success of deregulation. The more planes and companies in service, the more congested the skies. Finding a way to handle this traffic will be essential to the long-run health of the system.

All that said, air transportation has never been more accessible to all people. And so long as the government continues to follow the advice of Alfred E. Kahn, who chaired the Civil Aeronautics Board that deregulated the industry and urged that we make "every effort to encourage the contestability of [airline] markets," the skies will stay friendly.

Scott A. Resnick '01, a Crimson executive, is an economics concentrator in Cabot House.