Second Thoughts on Airline Deregulation

“The deregulation of air travel and other sectors of the economy in the 1970s was (and continues to be), in my view, a profound mistake. While controversial, I assure you that this contrarian take is not (entirely) a product of big-government sentimentalism from a crabby online socialist.”

There is not much to say about the life and legacy of President Jimmy Carter that authors and essayists have not already noted in a more eloquent way than I have. Suffice to say, the man was a rare specimen in the world of politics: a truly Great Man, more beloved after than during his time in power, who nevertheless set a standard for post-presidential life that no president in my lifetime is likely to surpass. Whatever people thought of President Carter while in office, his legacy will forever be tied to his charitable endeavors performed in the shadows of the public spotlight. In that sense, I agree with writer Jonathan Church that President Carter was “a man who was ahead of his time.” But I do take issue with Church’s brief and laudatory discussion surrounding President Carter’s achievements while in office, specifically his role as the “Great Deregulator.”

The deregulation of air travel and other sectors of the economy in the 1970s was (and continues to be), in my view, a profound mistake. While controversial, I assure you that this contrarian take is not (entirely) a product of big-government sentimentalism from a crabby online socialist. One can read more about the structural problems with airline deregulation (and air travel more generally) detailed by several eminent experts, including many who praise President Carter’s role as the “Great Deregulator.” In this essay, I will critique President Carter’s legacy regarding airline deregulation and explain why the free-market sentimentality around deregulation is shallow and ill-deserved.

Airline Deregulation Was a Boon for Consumers…

It is worth discussing what my fellow pundits and I mean by “deregulation.” Concerning air travel, “deregulation” refers explicitly to the Airline Deregulation Act of 1978, itself part of a much larger packet of deregulatory reforms enacted during the Carter and early Reagan administrations. Before 1978, commercial aviation in the United States was overseen by the Civil Aeronautics Board (CAB), whose regulations on air travel structurally mirror those existing for utility industries such as gas, water, and power distribution. The CAB was one of many “alphabet soup” agencies created under the New Deal; its overarching prerogative was promoting and sponsoring commercial aviation development in the United States. Accordingly, the CAB controlled many aspects of the industry in ways that would be deemed “socialistic” by modern commentators (and not just Reaganite conservatives): It extensively used price controls to regulate airfares, centrally allocated flight routes to incumbent carriers, and even restricted the entry of new airlines from participating in the interstate travel market without official authorization. At the time, the industry was seen as a market with “natural monopoly” characteristics that merited utility-style command-and-control regulations, which economists usually disfavor.