Airline deregulation is a failure, conclude Professors Dempsey and Goetz. They assault the conventional wisdom in this provocative book, finding that the Airline Deregulation Act of 1978, championed by a profound political movement which also advocated the deregulation of the bus, trucking, rail, and pipeline industries, failed to achieve the promises of its proponents. Only now is the full impact of deregulation being felt. Airline deregulation has resulted in unprecedented industry concentration, miserable service, a deterioration in labor-management relations, a narrower margin of safety, and higher prices for the consumer. This comprehensive book begins by exploring the strategy, tactics, and egos of the major airline robber barons, including Frank Lorenzo and Carl Icahn. In separate chapters, the strengths, weaknesses, and corporate cultures of each of the major airlines are evaluated. Part Two assesses the political, economic, and social justifications for New Deal regulation of aviation, and its deregulation in the late 1970s. Part Three then addresses the major consequences of deregulation in chapters on concentration, pricing, service, and safety, and Part Four advances a legislative agenda for solving the problems that have emerged. Professors Dempsey and Goetz advocate a middle course of responsible government supervision between the "dead hand of regulation" of the 1930s and the contemporary evil of market Darwinism. The book will be of particular interest to airline and airport industry executives, government officials, and students and scholars in public policy, economics, business, political science, and transportation.
Author(s): Stephen Paul Dempsey, Andrew R. Goetz
Year: 1992
Language: English
Pages: 372
Tags: Транспорт;Технология и организация перевозок;
Contents......Page 8
Preface......Page 14
Acknowledgments......Page 18
Part I: An Introduction to the Deregulated Airline Industry......Page 20
1 Introduction......Page 22
2 Corporate Pirates and Robber Barons in the Cockpit......Page 30
Deregulation......Page 31
Debt—On Balance Sheet and Off......Page 40
Corporate Pirates and Robber Barons......Page 43
Foreign Ownership......Page 53
3 The Megacarriers......Page 60
4 American Airlines......Page 72
Continental Airlines Corporate Culture......Page 84
Continental’s Proud Tradition......Page 85
Frank Lorenzo Acquires Continental......Page 86
Frontier Airlines......Page 88
Donald Burr and People Express......Page 91
Donald Burr Acquires Frontier Airlines......Page 95
The Sinking Ship of People Express......Page 100
Frank Lorenzo Acquires People Express and Frontier Airlines......Page 106
Postmortem on People Express......Page 109
6 Delta Air Lines......Page 122
7 Eastern Airlines......Page 128
8 Northwest Airlines......Page 138
9 Pan American World Airways......Page 142
10 Trans World Airlines......Page 152
11 United Airlines......Page 160
12 USAir......Page 170
Part II: Regulation and Deregulation: The Metamorphosis in American Public Policy......Page 176
13 Origins of Regulation: The Legislative History of The Civil Aeronautics Act of 1938......Page 178
The Surface Carrier and Public Utility Analogy......Page 179
Avoidance of Excessive Competition......Page 180
Competition vs. Monopolization......Page 181
Providing Order and Stability for the Growth of an Infant Industry......Page 182
14 The Traditional Regulatory Criteria......Page 186
Entry......Page 192
Rates......Page 193
Antitrust......Page 194
16 The CAB under Alfred Kahn: The Origins of De Facto Deregulation......Page 198
Competition Embraced as the Overriding Policy Objective......Page 199
Calls for Caution and Moderation Dismissed......Page 200
Profitability of Proposed or Existing Operations Deemed Irrelevant......Page 203
Potential for Destructive Competition Dismissed......Page 204
Potential for Oligopolistic Market Dismissed......Page 205
The New Policy Declaration......Page 212
Dormant Authority......Page 214
Other Entry Provisions......Page 215
Indiscriminate Multiple Permissive Entry Explicitly Rejected......Page 218
Indiscriminate Multiple Permissive Entry Implicitly Adopted......Page 220
Show-Cause Proceedings: The Floodgates Burst......Page 223
Fitness Rendered Impotent as an Entry Criterion......Page 225
19 The Demise of the Civil Aeronautics Board......Page 234
Part III: The Results of Deregulation......Page 238
Allocative Efficiency, Competition, and Contestability......Page 240
Industry Economic Anemia......Page 244
Concentration......Page 246
Contestability Mythology Debunked......Page 253
21 Pricing......Page 262
Price Savings......Page 263
Cross-Subsidization and Pricing Discrimination......Page 268
The Emerging Oligopoly......Page 270
Quality Disintegration: Ticket Restriction and Delays......Page 273
Appendix......Page 276
Service Frequency......Page 284
On-Time Performance......Page 290
Service Quality......Page 293
The Brookings Study......Page 300
Analysis of Study Results......Page 303
Critique......Page 304
Summary......Page 312
24 Safety......Page 316
The Disintegration of the U.S. Airline Industry......Page 328
Former DOT Secretary Skinner’s Observations on the Contemporary Crisis in the Airline Industry......Page 330
Survival Characteristics of U.S. Airlines......Page 331
Foreign Ownership......Page 340
Conclusions......Page 346
Part IV: Proposed Solutions: The Proper Relationship between Government and the Market......Page 352
26 Reregulation: Dare We Speak It?......Page 354
Entry......Page 362
Pricing......Page 364
Antitrust......Page 366
Consumer Protection......Page 367
Safety......Page 368
A New Independent Federal Transportation Commission......Page 369
28 Conclusions......Page 374
Epilogue: Toward a National Deregulation Day......Page 380
B......Page 384
C......Page 385
E......Page 386
J......Page 387
N......Page 388
R......Page 389
T......Page 390
Y......Page 391
