Bring Back Airline Regulation?

April 18, 2008 -- This week Opportunity 08 takes a closer look at closer look at how the next president should make the U.S. economy more efficient through further deregulation.

Thirty years after passage of the Airline Deregulation Act, the U.S. airline industry is still adjusting. There's been a lot of upheaval lately. Aloha and ATA Airlines are out of business and Frontier is in bankruptcy. Delta and Northwest are working on a merger; Continental and United are each looking for a merger.

Up on the Hill, Sen. Daniel Inouye says he plans to conduct Senate hearings to examine re-regulation. Not so fast, says Robert Crandall of the Brookings Institution. He says deregulation has led to significant consumer savings and safety and that the next president should continue to promote deregulation and to open up the domestic market to allow foreign carriers to compete.

Deregulation of major industries in the United States began in the 1970s and spread to the United Kingdom and, to a lesser extent, to the European continent. Crandall says that despite enormous success, the deregulatory movement may be stalled.

The U.S. needs to further extend deregulation, asserts Crandall. "There simply is not much traditional economic regulation left in the United States, outside the telecommunications and electricity sectors. However, a great deal of federal interference with the market still occurs, including government control of the electromagnetic spectrum, non-price allocation of water and highways, regulation of airport landing rights, and air traffic control."

Crandall claims that reducing these interventions may benefit the economy more than hunting down the last vestiges of traditional economic regulation.

A proposal for extending deregulation is available at www.opportunity08.org.

About the Experts and the Project

Robert CrandallRobert Crandall is a Brookings senior fellow. He is an expert on antitrust and regulatory policy; the auto and steel industries; and telecommunications. Crandall was the deputy director of the Council on Wage and Price Stability during the Ford and Carter administrations. He has been a consultant to the Environmental Protection Agency, the Antitrust Division of the Federal Trade Commission, and the Treasury Department.