Alfred E. Kahn dies at 93; promoted airline deregulation

Alfred E. Kahn, who presided over the historic deregulation of the U.S. airline industry during President Carter’s administration, paving the way for JetBlue and other low-cost carriers, died Monday. He was 93.

Kahn, an economics professor at Cornell University, died of cancer at his home in Ithaca, N.Y., the school announced.

A leading scholar in public utility deregulation, Kahn led the move to deregulate U.S. airlines as chief of the now-defunct Civil Aeronautics Board in 1977-78. The board had to give its approval before airlines could fly specific routes or change fares.

President Carter embraced deregulation as a means of stimulating economic growth. Kahn was largely instrumental in garnering the support needed to push through the Airline Deregulation Act of 1978 — the first thorough dismantling of a comprehensive system of government control since 1935.

By letting airlines instead of the government decide routes and fares, Kahn is credited above anyone else with enabling a dramatic drop in airline fares and a boom in air travel over the last 30 years.

Deregulation opened the way for such carriers as People Express and JetBlue, and allowed low-cost Southwest Airlines — which until then had operated only within Texas, outside of CAB’s reach — to expand nationwide.

But the move also contributed over the years to the death of such storied names as Pan American and the erosion of in-flight amenities.

“While the resulting competitive regime has been far from perfect, it has saved travelers more than $10 billion a year,” Kahn wrote in a 1998 New York Times essay.

Kahn was also a key player in a broader movement that persuaded Congress to give industries such as trucking, railroads, financial services, telecommunications and cable television the ability to set prices without government involvement.

In October 1978, Carter made Kahn his anti-inflation czar, with a mandate to curb rising costs in arenas such as food, medical care and energy. High oil prices, a weak bond market and a falling dollar fueled an economic crisis in 1979, and inflation approached an annual rate of 12%.

“It’s housing costs, it’s insurance regulation, it’s everything in the world,” he told The New York Times in 1979. “Sometimes I feel it (inflation) touches so many things, it’s an area as wide as the ocean, but I’ve been about one molecule deep.”

Inflation remained a big problem and contributed to Carter’s defeat to Ronald Reagan in his bid for a second term in 1980.

Kahn spent most of his career as a professor at Cornell, joining the faculty in 1947 and finishing aprofessor emeritus of political economy. He was widely regarded as one of the world’s leading scholars and influential figures in public utility deregulation.

Born in Paterson, N.J., in 1917, Kahn earned bachelor’s and master’s degrees at New York University and a doctorate at Yale University in 1942. Early in his career, he worked for the Brookings Institution, the antitrust division of the Justice Department and the War Production Board.

After completing basic training in 1943, he served as an Army economist for the Commission on Palestine Surveys.

In the early 1970s, while at Cornell, he wrote a study of government controls of private industry called “The Economics of Regulation.”

In 1974, he took a six-year leave from the university when he was appointed chairman of the New York Public Service Commission, which oversaw regulation of electric, gas, telephone and water companies.

He introduced an electrical-rate pricing system that gave breaks to users during non-peak hours and permitted Bell System competitors to hook up to the telephone giant’s equipment.

Kahn is survived by his wife, Mary, and three children and was the legal guardian of a nephew.

news.obits@latimes.com