An idea that seems to be gaining currency, politically, is for the airline to go back to an old-style regulatory regime of less competition and more stable profits.
The endless boom-and-bust cycle of the industry has always made some wonder whether cutthroat fare competition really makes sense, and the recent spate of airline safety woes has given more ammo to the side which says the industry is out of control and needs more top-down structure.
Consumers don’t really mind the booms, busts and bankruptcies. So long as they can get cheap tickets to wherever they want to go, they’re happy.
Safety issues, however, have real resonance with the public, and so proponents of re-regulation are really latching onto the safety angle.
In “Flying Blind: Airline Deregulation Reconsidered”, a wide-ranging new Demos report on the industry, co-authors James Lardner and Robert Kuttner point to preliminary findings in the Buffalo investigation that the pilot and co-pilot lacked crucial experience and training, and “down time” between flights. Since the crash, critics have raised questions about the little-known regional airlines that now handle a growing proportion of domestic flights, effectively acting as subcontractors to the big brand-name airlines. The major carriers have been widely faulted for farming out more and more flights to these smaller companies, which, in many cases, appear to have significantly less rigorous hiring and training standards.
The authors highlight that regional carriers now account for roughly 35 per cent of all flight-hours, more than double the 16 per cent share that these companies held at the beginning of the decade. At that time, the report shows, two-thirds of all heavy aircraft maintenance was performed in-house, while today more than 70 per cent of the work is outsourced, leaving federal inspectors scrambling to keep up with nearly 5,000 repair facilities in the U.S. and abroad.
Certainly the Buffalo crash alarmed many about the issue of training, and whether the prevalence of these “little-known regional airlines” were in fact making the industry less safe. Perhaps from a safety perspective, going back to the days of only big carriers, with limited competition on prices and routes, might make sense.
But Leff demolishes this idea in a post at his blog View From The Wing. The whole thing is worth reading, but here are a few of the main points:
- Safety regulation hasn’t changed. Deregulating the industry only applied to fares and routes, and the government remains highly engaged. It’s hardly an old-west free for all, as some might claim.
- The industry has gotten much safer over the years. Says Leff: ” In 1977, the year before airline deregulation, there were 6.2 accidents and 195.1 fatalities per million departures. In 2004 (chosen as the most recent year from the first data source I pulled up on Google), there were 0.9 accidents and 23.29 fatalities per million departures.”
- Eliminating regional carriers wouldn’t solve the pilot training program. You’d just have those same rookie pilots working for majors instead. In other words the demand mix would change, but not the supply. (This is a key point).
- The wars in Iraq and Afghanistan have contributed to pilot shortage, as the military has been offering much higher-than-normal retention bonuses to pilots. It’s a challenge for the industry, but it has nothing to do with deregulation.
Leff goes onto pick apart the real motivations behind the study, which is to re-establish an environment for a more unionized workforce. Robert Kuttner is a well-respected liberal writer and economist and author of Everything For Sale: The Virtues And Limits of Markets, which generally seeks to cast doubt on the wisdom of free markets, so taking up airline safety as a reason to re-regulate is a natural angle for him.
One potential critique of Leff is that he downplays technology gains since 1977, though he does acknowledge them, as being the major contributor to improved safety. But there’s no reason to separate technology out from other changes in the industry. All it shows is that even with the razor-thin margins and boom-bust cycles, the industry has continually invested in new, advanced technology to make crashes more rare. Now if there were clearly better technology on the market, and our airlines could never afford to invest in them, that’d be an issue, but it doesn’t appear to be the case.