Deregulation Does In 200 Airlines; Only 74 Left

Instead of promoting healthy competition to reduce air fares, deregulation of the nation’s airline industry has resulted in the bankruptcy or the sale of more than 200 airlines, according to a private study released today.

Ten years after deregulation became law, only 74 air carriers remain in business, according to the study by the Economic Policy Institute, a Washington research center. And with the federal government’s penchant for approving airline mergers, that number may further narrow to 9 or 10 megacarriers by the end of the century, it said.

The study blames the Ronald Reagan Administration for the consolidation of the industry.

“What had begun as a program of modest liberalization became an avalanche of abdication of responsible government oversight,” said the study, whose author, Paul Stephen Dempsey, a University of Denver transport law professor, previously defended deregulation as a lawyer for the Civil Aeronautics Board.

“We ought to have the courage and wisdom to admit we made a mistake. The time has come to roll back deregulation,” the study said.

Contradicting a Department of Transportation report released last month, the study found deregulation had failed to reduce air fares. It said the DOT’s conclusion attributing lower fares to increased competition did not include the fact that fuel prices had been declining.

Air travel cost is currently up 2.6% per mile for the average passenger from pre-deregulation prices, the study said. So for each trip, costs may be up as much as 33% because deregulation has encouraged longer flights.

“In addition to more circuitous flights, deregulation appears to have brought us a roller coaster ride of high and low fares, which can change on an hourly basis and include a labyrinth of restrictions, including refundability,” the study said.

It said deregulation has also resulted in poorer service.