For nearly 50 years, American consumers have enjoyed the many benefits of airline deregulation. From cheaper fares and more travel destinations to a growing assortment of in-flight service options, air travel is better, safer, and more widely available than ever. Unfortunately, that hasn't stopped critics from telling a revisionist version of history that alleges that consumers were better off before the passage of the Airline Deregulation Act in 1978. If these revisionists are successful in turning back the clock, the impact on consumers would be very costly.
Five decades ago, the nation’s Civil Aeronautics Board was tasked with such invasive responsibilities as assigning routes for airlines and price setting. Supporters argue this system ensured that all corners of the country were serviced at affordable prices. In addition, they argue that it fostered healthier competition and better customer service than what exists today.
However, little about this narrative is accurate, and returning to such a system would have devastating consequences for American consumers who have benefited enormously from the liberalization of airline regulations.
For starters, air travel is much more accessible today than before deregulation. According to Airlines for America, as recently as 1971, only 49 percent of Americans had ever traveled commercially on a plane, and just 21 percent had done so in the past 12 months. By 2022, 87 percent of Americans had traveled commercially, with nearly half having done so in the past 12 months. This trendline has been steadily ticking upward every year, and there is little reason to think it will stop soon. Today, the Federal Aviation Administration estimates it handles as many as 45,000 flights and 2.9 million passengers every day.
Flying is also remarkably safe, with no U.S. airlines having been involved in a fatal crash since 2009. Record investments in aircraft, facilities, IT upgrades, and equipment have enabled airlines to mitigate the number of accidents, making flying one of the safest modes of transportation today.
Air travel is also much cheaper than it once was. Stiff competition and rapid advances in technological innovation have led to a steep decline in the price of fares, affording more Americans the opportunity to fly. According to Bureau of Labor Statistics data, between 2014 and 2023 alone, real airline prices declined by 32.53 percent, equal to a $90.09 drop in 2014 dollars. A 1997 paper by researchers Robert Crandall and Jerry Ellig found that airline deregulation saves consumers $19.4 billion per year. No longer is flying a luxury reserved for the elite of society, but a valid form of transportation available to Americans of all income levels. Deregulation helped make this possible.
Deregulation also helped pave the way for greater competition in the marketplace. Despite critics' preoccupation with the number of airline mergers and airlines' establishment of hub-and-spoke airport networks, deregulation has lowered barriers to entry, creating new opportunities for more low-cost airlines and enhanced competition among established carriers. According to Department of Transportation (DOT) data, the average number of competitors per domestic trip increased somewhat from 2000 to 2023. Most Americans today have multiple options to choose from when flying from point A to point B.
Customer service has also improved over time. While storm-induced flight delays and cancelations tend to make the headlines, airlines are constantly looking for new ways to improve the quality of their service offerings, including reimbursing customers for any trouble they may experience. Airlines have a strong incentive to not only abide by DOT regulations but also exceed them to retain and expand their customer base. They do this by offering customers a range of customizable service, such as the ability to check and track luggage, modify flight itineraries, and take advantage of royalty programs. The latter allows customers to spend accumulated travel points on free flights and other services like discounts on car rentals and hotel stays.
The reality is that flying is vastly more accessible, safe, economical, and competitive for the average American than it was before deregulation. A return to the antiquated system that existed before 1978 would be a colossal mistake, and lawmakers should refrain from even entertaining the idea.
As President Jimmy Carter remarked upon signing the Airline Deregulation Act, this legislation would provide Americans with “an opportunity for low-priced air transportation” and mean “less Government interference in regulation of an increasingly prosperous airline industry.” That statement is just as true today as it was when first uttered 46 years ago. Airline deregulation is a remarkable success story worthy of imitation, not reversal.
A small but growing number of critics are clamoring for a return to the heavy-handed regulations that governed the airline industry between 1938 and 1978. If these critics are successful, the result will be significantly higher prices for consumers. Policymakers must not let history repeat itself.
