The Justice and Transportation departments requested input into the state of competition in U.S. air travel in October. This request was not a serious attempt to change the status quo to benefit flyers.
Overregulation of the airline industry will work against what should ultimately be the departments’ goals: to protect consumers and ensure a level playing field.
Within the past decade, the airline industry has taken significant strides to improve the customer experience. Despite the challenges — including the COVID-19 pandemic, staffing shortages and other volatile costs — offerings to passengers have grown. At the same time, airfare has become more affordable, especially compared to prices before the industry had many burdensome hurdles removed in the Airline Deregulation Act of 1978.
Studies show that airline deregulation led to annual consumer savings of $20 billion, and competition remains robust. In the last decade, competition has driven inflation-adjusted prices down 34 percent. For example, a $500 airline ticket would cost Americans $173 less today — actual savings. In fact, the most recent data show airfares are 25 percent lower relative to overall inflation since pre-pandemic benchmarks.
Despite this success for consumers, Transportation Secretary Pete Buttigieg has turned airlines into a punching bag. He and the administration are missing any empirical justification for more regulation. Clearly, in the interest of consumers, we should not take a step backward.
Intense competition has not just delivered lower prices. Airlines now connect to more destinations than before, spanning international, regional and local markets. Through alliances and codeshare agreements, they offer travelers an expanded network, providing access to a broader variety of locations.
Notwithstanding a small number of issues, airlines have kept cancellations low.
Buttigieg’s targeting of airlines never seems to end. Another one of his egregious missteps was the September investigation that Transportation opened into airline-credit card partnerships and rewards programs. Americans rely on points and miles to help them afford vacations. Nearly one in four households hold an airline-affiliated credit card. These frequent-flier miles make everything from regular travel to dream vacations easily obtainable. Government attempts to regulate or eliminate these programs are another example of DOT making consumers worse off by trying to solve a problem that does not exist.
The administration has created a legacy of interfering in private markets and imposing new and greater regulatory impediments. The Transportation and Justice inquiry reveals the desire to add cumbersome regulations and impose new costs on airlines and consumers. The airline industry is already in a precarious position — operating on thin profit margins a third of the size of the average U.S. corporation — while facing multilayered problems like supply chain issues, the struggle of rebuilding following the pandemic, and cost pressures of labor and fuel.
In light of this, the federal government should abandon this inquiry into the air travel market. When allowed to function properly, the private market works to deliver optimal goods and services to consumers. This probe is a waste of time and taxpayer-funded resources that will result in a decreased quality of service as airlines are forced to bend to unnecessary regulations.
Government attempts to over-intervene have traditionally proven to work against the public interest. When legislation was passed to deregulate commercial airlines, it worked for passengers, truly democratizing flying. For the sake of consumers, let’s keep the days of unaffordable flying in America’s past.
Steve Pociask is President and CEO of the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.org or follow us on X @ConsumerPal.