By Thomas Sowell             (1/14/1989)
       From the New York Daily News, 10 January 1989, p. 29:1
                      (Syndicated Column)       

            [Kindly uploaded by Freeman 10602PANC]

   Back in 1978,  the Airline Deregulation Act  ended 40 years of
federal economic control  of the airline  industry, while federal
control of safety standards remained.  What have been the results
of a decade of deregulation?
   o Fares are lower than they were before deregulation -- one of
the few things cheaper than 10 years ago.
   o Passenger trips have almost doubled.
   o Air fatalities per passenger mile are lower than before.
   o The number  of passenger complaints in  1988 were lower than
in 1978, even though far more people are flying.
   A  success,  right?   Not  in  the  eyes  of  deep-thinkers in
academia and  the media.  A  couple of  economics professors with
the old-time  religion of government  intervention have denounced
deregulation  as ``rambunctious,  laissez-faire  anarchy.''  They
and others have spread hysteria  over facts so simple and obvious
that only an intellectual could misconstrue them.
   As often happens when there is a competitive marketplace, some
firms try  to take business  away from others  by cutting prices.
In a few wild  cases, an airline trying  to attract attention has
charged less than a dollar per ticket when it first began service
on a  route where  another airline  was already well-established.
These and other gimmicks obviously couldn't last very long.
   Sometimes the price-cutting airline itself has not lasted very
long but has  gone belly-up.  Human  beings have miscalculated as
long as  there have been  human beings.  People  who run airlines
are no exception.
   As with many other competitive industries, the number of firms
that  think they  can make  it  is usually  much larger  than the
number  that  can  actually  survive  the  competition.   As more
airlines began failing, their planes and airport gates were taken
over by  the remaining  airlines.  Nothing  very mysterious about
this  --  except   to  deep-thinkers,  who   started  calling  it
   The airline industry  has changed, like  all other industries.
One  of the  changes  has been  for  large airlines  to establish
``hubs'' at  particular cities,  where the  passengers can change
planes from one of their routes  to another.  When an airline has
lots of flights coming into  one city where its passengers change
planes, naturally  it has lots  of gates in  that city's airport.
Again,  nothing  mysterious about  all  this --  except  to deep-
thinkers with their bogeyman theories.
   ``At Chicago's  O'Hare International  Airport, United Airlines
Inc.  now  controls  about  53%  of  all  passenger  boardings,''
according to a recent issue of  Business Week.  If ever there was
a  ``so what?''  statistic, this  is it.   O'Hare is  the world's
busiest airport.  If you've ever  been there, you know that every
airline you've  ever heard  of (and  some you've  never heard of)
flies in and out of O'Hare.
   What  earthly difference  does  it make  economically  if vast
numbers  of United  Airlines  passengers are  changing  planes in
Chicago?  Irrelevant percentages and slippery definitions are the
curse of this whole branch of economics.  United Airlines doesn't
``control'' passengers at O'Hare Airport.   If you don't like the
fares or the  service on United, you  have umpteen other airlines
to choose from at O'Hare.
   For years,  the high priests  of bogeyman  economics have been
using  the word  ``control'' to  refer to  the percentage  of the
total  business  done by  one  firm or  a  group of  firms  in an
industry.  But what really matters  is whether the consumers have
   If  you could  fly coast  to coast  on Northwest  Airlines and
change   planes   in  Minneapolis,   the   fact   that  Northwest
``controls''  82%  of  the business  in  the  Minneapolis airport
doesn't mean it can jack up the price of the tickets for the vast
numbers of people changing planes there.  If Northwest did, those
people would fly coast to coast  on some other airline and change
planes in  St. Louis,  Chicago or  some other  city where another
airline ``controls'' a big percentage of the passenger traffic.
   The real question  is why the media,  Congress and even judges
are so gullible  when it comes  to percentages, impressive graphs
and slippery definitions.

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