Alfred E. Kahn, President Carter's nominee to head the Civil Aeronautics Board, yesterday put the airline industry on notice: More competition is in their future.
In confirmation hearings before a Senate Commerce Subcommittee, depth knowledge about the economics of the airline industry, but said he would come to the job with a "predilection" favoring competition based on 20 years' study of regulation as an economist and, more recently, as a regulator - chairman of the New York Public Service Commission.
"I know less than I plan to know about the airline industry before I make any pronouncements about the things I'm going to do, but I do begin with a clear philosophical economic conviction that in regulated industries generally, more competition is desirable where it's feasible," he said, "If I'm confirmed, I aim to see - with caution and care - to what extent the marketplace can take over the functions that are now performed by very imperfect regulators like me."
He cited more freedom for airlines to raise and lower their fares with a minimum of regulatory interference, and more freedom for carriers to open new routes as "the direction" he would want to go.
As chairman of the CAB, he promised to try to fight the "inherent" tendency of regulators to be protective of the interests of the companies they are supposed to be supervising and to "give reign to competition to the greatest extent possible."
As an example, he noted that New York had been a leading state in opening up the telephone equipment market to competition, although the Bell System had wanted to retain what it contended was a natural monopoly in the field.
During the two-hour hearing, Kahn also:
Agreed to take a look at whether the airlines' lobbying expenses against legislation to alter regulation should be excluded from their rate base.
Declared that newcomers to the industry should "absolutely" be assured of decisions on their applications within a reasonable period of time, like a year. There were gleeful smiles on the faces of some of those would-be newcomers in the hearing room.
In response to a question from Senate Aviation Subcommittee Chairman Howard W. Cannon (D-Nev.), Kahn said proposed legislation cosponsored by Cannon and Sen. Edward M . Kennedy (D-Mass.) to reduce regulation of the industry over time was the "poper" direction for Congress to go. He said it would be unwise to "simply let down all the barriers" at once. Just as regulation is imperfect, totally free and unfettered competition is "not very perfect either," he said.
Kahn confirmed that it was the President's commitment to regulatory reform which caused him to change his mind and accept the CAB post he first turned down.
Kahn, 59, has been head of the New York regulatory body since 1974. He has been in and out of Washington often throughout his professional career. In addition to service as a consultant to federal agencies, and participation on special boards and commissions, he has had stints at the Brookings Institution, the Justice Department's Antitrust Division, the Commerce Department, and the Council of Economic Advisers.