Airline Deregulation

“We’re sailing into somewhat uncharted waters for this summer by letting (airline) carriers decide how to price their product upward. But given the nation’s economic problems and already-high air fares, I don’t feel the carriers will abuse consumers.”

With those words, Marvin S. Cohen, chairman of the Civil Aeronautics Board (CAB), announced with his fellow commissioners last week that the airlines could raise their fares 30 percent above the route base price for trips of more than 400 miles, 50 percent for trips of 200 to 400 miles, ant without limit on routes less than 200 miles.

The CAB commissioners believe that their decision is within the authority granted them by the Airline Deregulation Act, which phases out airline economic regulation by 1983 and the CAB itself by 1985. Whether their decision is lawful probably will be decided in the courts. But the effect on airline passengers will not take so long. Airline industry spokesmen expect an initial 4 to 6 percent boost in coach fares and Braniff is asking for increases of 10 to 25 percent.

The CAB, for example, permits Eastern Airlines to raise the one-way price of its Washington-New York shuttle to $88. Presently the cost is $60, up from $51 only a few weeks ago. Standard fares on domestic airlines already have gone up 40 percent since November 1978.

Although there are cut-rate fares on some routes (with special conditions in departure cities which many passengers find inconvenient), questions are increasingly being raised as to whether deregulation will work for airline passengers. Or will regulation of air fares overwhelmingly be replaced by an oligopoly of a few airlines charging astronomical prices? The prospect of competition working is not enhanced over time by a series of airline mergers — Southern and North Central, Pan American and National and the likely acquisition of Hughes Airwest by Republic —which presage additional airline industry con­centration.

Airlines now routinely explain sharp ticket price increases by alluding to rising fuel costs. Neither they nor the CAB bother explaining how a doubling of fuel costs, which constitute 25 percent of airline costs, can be justified by a 40 percent standard fare increase in the same period, not to mention what “Barron’s” magazine calls the “dramatic gains in efficiency” of some airlines.

CAB officials still believe deregulation will work, although some are becoming more uneasy about airline mergers and what they call the rigidity of airline equipment movements in entering new markets. Who, moreover, can challenge Eastern’s New York-Washington-New York shuttle monopoly? No additional take-off or landing slots are physically available for any potential competitors at either La Guardia or Washington National Airport.

Before its 1983 expiration date, the CAB has to confront these problems in addition to the issue of small community service. But at its highest levels the Board shows little appreciation of the need to develop an instrument for airline passenger organization. Without organized passenger advocacy, deregulation cannot work. Collusive, cartel in concentration forces are simply too attractive to the industry to permit an unorganized consumer sovereignty.

The CAB should push for a clear notice on all airline tickets and airline counters inviting passengers to join their own airline passengers’ consumer group operation under open access procedures.

In this way, those resigned passengers lining up at the Eastern shuttle can join a group whose mem­bership dues would provide a qualified staff to argue their case and develop organized consumer strategies to win their points. Orderly access at airline departure gates also should be available so airline passenger groups can focus on a particular airline grievances by reaching those particular passengers.

When the CAB loses its power to set fares on January 1, 1983, airline passengers must be ready in an organized fashion to demand that the Federal Aviation Administration and the Justice Department’s antitrust division adequately enforce the safety and anti-monopoly laws. Just as important, these airborne consumers should be able to negotiate directly with the airlines for improved services at fair prices.