Airline deregulation has resulted in $5.7 billion worth of benefits annually to airline travelers and $2.5 billion in additional earnings for air carriers, according to a study by the Brookings Institution.
In effect, airline deregulation has been good for just about everyone, including airline employes, the study concludes. However, its authors said the study focused on deregulation in 1983, before new contracts were concluded with lower rates of pay and wage systems under which new workers receive much less than incumbent airline employes.
According to Steven Morrison and Clifford Winston, the authors of "The Economic Effects of Airline Deregulation," about one-third of the benefit to air travelers was in lower fares and about two-thirds of the benefit came from more frequent flights. The biggest beneficiaries of deregulation were business travelers, who benefit most from more frequent flights.
According to the study, no geographic sector has particularly benefited or has been particularly disadvantaged under deregulation.
Travelers on low-density routes have had to pay higher fares, "but the loss is compensated for by a gain from increased departure frequency," the study said.
The study looked at the industry in 1977, when it still was substantially regulated, and calculated what fares and other factors would have been under the largely deregulated conditions that existed in 1983. "I think, if anything, we're understating it," Winston said.
However, George James, president of Airline Economics, an economic consulting firm, said savings from deregulation "are very difficult to calculate. Those are difficult assumptions to make."
"I think that one has to conclude that, indeed, the average consumer of air fares has benefited by reduced fares," James said. "You have about 87 percent of the traffic today on discount, and it was about 35 percent before regulation."
However, he said travelers who live in smaller communities along less-traveled routes might have a different view.
In any event, he said, "It is no longer relevant to ask the questions, because we cannot go back."
The authors of the Brookings study said deregulation probably has accelerated the development of the hub-and-spoke system of airline routes. Under that system, carriers provide service from city to city through a central connecting point.
"Because most city-pair markets are not large enough to support frequent direct service, carriers have developed hub-and-spoke networks to increase their ability to offer single-carrier service to connection passengers," the study said.
The authors noted that, in 1977, the share of total revenue passenger miles provided by a single carrier was 75.4 percent. By 1983, that share had increased to 89.1 percent.
The biggest average benefit has been to travelers flying from smaller communities to large hubs, Winston said.