Consumers saved almost $2.5 billion through lower air fares in 1978 because of loosened government regulation of airline prices and entry to new routes, the Civil Aeronautics Board estimated yesterday.
"We say 'saved' because that is the difference between what passengers actually paid to air travel versus what they would have paid for the same travel had the price trends of previous years continued," CAB member Elizabeth E. Bailey told Congress yesterday.
She also noted that a more refined estimate would show that many passengers who 'saved' the difference wouldn't have flown at all if it hadn't been for the widespread availability of lower fares.
Overall, average air fares declined by 1.4 percent on domestic routes last year at the same time that inflation caused consumer prices to rise by 9 percent.
Nevertheless, the board was disappointed that unrestricted low-fare service hadn't spread more rapidly, Bailey told members of the House aviation subcommittee. Although widespread discounts are available throughout the nation, they entail various advance-purchase and minimum-stay or maximum-stay requirements, and the board wants to see coach fares drop across the board as they have between New York and California as a result of World Airways' initial pricing when it came into the market.
Bailey said a shortage of airplanes meant the airlines are generally operating with high load factors now, and there is "not much incentive" to lower prices. She predicted more reductions in coach prices, however.
Bailey's testimony came during the opening of a series of hearings to asses the impact of airline deregulation.
As some small and medium-sized cities began to suffer declines in air service when airlines sought to add service elsewhere, some members of Congress have expressed doubts about the widsom of deregulation.
Bailey said yesterday that statistics the board has been collecting indicate nine months after the deregulation act became law last weekly service linking small cities to medium and large ones rose more than 4 percent while flights linking one small town to another declined by between 4 percent and 6 percent.
Service linking small towns to larger ones is more valuable because it provides residents of small points with a useful pattern of connecting flights, she said.
While 373 communities had increases or no change in certificated service between April 1978 and April 1979, 284 communities and decreases, she said.
Since October, the CAB received 130 notices from certificated airlines that they intended to terminate all their service to a point, counting both large cities and small.
In 43 instances, the CAB blocked suspensions of service it found might bring a community's air service below what appeared to be an essential level, she said.
She added that many cities recieved improved service from a replacement airline when the CAB allowed the certificated airline to suspend. Only one small town in Oregon with airport terminal and runway problems lost all service, the subcommittee was told.
The expansion of the air transportation system in the last two years -- the period after the law as passed and also before, when the CAB was engaging in some administrative deregulation -- has highlighted two problem areas, Bailey said: increasingly tight supplies and increasing costs of jet fuel and access to already congested airports.
Bailey said if the fuel situation deteriorates and it becomes less available mandatory allocation regulations may be invoked by the Department of Energy. So far, new airlines have been able to secure fuel supplies when replacing others seeking to drop service, but the board can consider the transfer of allocation if it becomes necessary, board officials said.