Air travel used to be glamorous and luxurious. How has the experience of flying in economy class become so devalued? It’s 50 years of deregulation. And after all, we, the customers, may just be getting exactly what we want.
ARI SHAPIRO, HOST:
Earlier this summer, the TSA broke records for the number of passengers passing through the gates. And with rising passenger numbers comes a lot of complaints. Erika Beras of the Planet Money podcast explains that the current state of flying is the result of a 50-year-old trend in the airline industry.
ERIKA BELLAS: When Don Barr was a child in the 1950s and 1960s, flying was a luxury that was out of reach for most people.
Don Barr: It was so fascinating and so exotic.
Bellas: Airlines competed with each other on these amenities because they couldn’t compete on price. At the time, the government regulated the number of national airlines, their routes, and how much they charged passengers. If the plane wasn’t full, the government subsidized the flight. By the 1970s, Don had become an executive at a small airline. He thought all this regulation was bad for the average passenger, and he wanted to change the situation.
Barr: We went to Washington many times.
Bellas: Oh really?
Barr: Well, we’ve lobbied people again and again for deregulation, because we’ve argued that it would be much easier to provide really good, reliable transportation if there wasn’t this oppressive pressure from the government constantly telling us what we can and can’t do. So we’ve lobbied again and again.
Bellas: Consumer advocates argued that deregulating airlines would allow more airlines to compete, lowering fares and allowing a more diverse range of people to fly. And so in 1978, Congress overwhelmingly voted to deregulate the national airlines. This meant Don could start his own low-cost airline, and a few years later, he did. He called it People Express. If you’re hungry, buy a snack pack. If you check a bag, there’s a fee.
It’s a lot like my flying experience today.
Barr: Well, don’t compare us to the Spirit, because…
Bellas: I’m sure you get asked that a lot, but what do you think?
Barr: Yes, we were the first airline to unbundle the product, so the concept is you pay for what you get.
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UNIDENTIFIED NARRATOR: The cost of everything is rising. But thanks to People Express Airlines, the rising costs are coming down.
Bellas: Soon People Express became the fifth largest airline and a threat to established airlines like American Airlines, because in the new post-deregulation world, airlines competed on price.
Barr: American Airlines took out a two-page ad in newspapers across the country saying, “You don’t have to fly with People Express anymore.” The ad immediately advertised prices in every market that were the same or lower than American Airlines’ prices.
Bellas: This was not a good thing for Don’s company.
Barr: When my mother called and said she was taking me somewhere American for Thanksgiving, I thought, wow, this really speaks to where we are right now.
Bellas: Your mother?
Barr: Yes, my mother. Yes. Yes.
Bellas: Yeah.
Barr: Exactly. She says she could have bought it cheaper in America.
Bellas: But it was great for passengers. Dozens of new airlines have sprung up over the years. But the established airlines were well-funded. Eventually, many of the new airlines went bankrupt or merged, including People Express, which merged with Continental, which eventually merged with United. Deregulation was supposed to increase competition, but today there are fewer national airlines than there were before deregulation. American, United, Delta, and Southwest account for about 70% of the market, and all of the airlines are working to cut costs.
What’s keeping prices low is the second wave of low-cost airlines that started growing in the 2000s, like Spirit Airlines and JetBlue. Deregulation was supposed to make flying more accessible, and it did. Now, almost 90% of Americans have flown. It was cheaper, but it felt cheaper to fly. That was the trade-off.
Erica Bellas, NPR News.
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