When Alfred E. Kahn, chairman of the old Civil Aeronautics Board, sold an all-too-willing Congress on deregulating the airlines in 1978, a key argument was that in a free-market atmosphere there would be greater competition -- hence lower fares.

Many skeptics warned that the opposite was likely to take place: in the absence of economic regulation by the federal government, they said, the stronger carriers would drive out the weak, and raise fares over the objections of defenseless consumers.

For a time, enough daring entrepreneurs (People Express, for example) offered competition to the established lines, and bargain prices appeared. But the inevitable has happened: The big ones gobbled up their competitors. Now, power over the airways has shifted to eight or nine major carriers that control almost 90 percent of the traffic.

And what they are doing is pushing airfares higher. In part, it is a response to recent government pressures for "truth in scheduling," which effectively is reducing the number of available flights.

The new fare pattern seems to have jarred even Kahn. He told the New York Times that because the various carriers have differing strategies, "you are not getting monopoly pricing, but it certainly bears watching."

The airline companies are raising fares at precisely the time they have demonstrated that, absent government intervention, they are unable to cope with an overloaded airways system. This system not only generates multiple inconveniences for travelers, but too many near-collisions.

Deregulation, almost 10 years after its inception, has spawned an oligopolistic monster: a second-class air transportation system in which mergers proliferate, the quality of service is poor, and safety may not be the top priority. We have been lucky that there has not been a horrendous accident toll.

Ted Harris, president of Airline Industry Resources, has a background of 25 years in the airline industry. He told USA Today: "We should be grateful that less than a couple of hundred of people have been killed in the past few years. Just in the events of the past few months, if you count up all the passengers on all of the planes involved in near misses, the fatality figure could easily be closing on 2,000 or 3,000 on commercial carriers alone."

Frederick C. Thayer, a transportation expert at the University of Pittsburgh, rejects the oligopoly charge, contending instead that the root of the problem is too much competition and "corner-cutting." Thayer suggests that the crash of Northwest Flight 255 in Detroit last month may have happened because baggage weight doesn't have to be calculated on domestic flights. He suspects the fully loaded, small Northwest jet, on a long route, didn't have the margin of safety necessary to offset the pilots' reported fateful error of not placing the flaps in the right position.

"If a {fully loaded} DC-9 flying New York-Washington -- little luggage, low fuel load -- went down the runway without flaps, it would take right off," Thayer said. He suspects the Northwest jet was over maximum weight.

Robert L. Crandall, chairman and president of American Airlines, is among a handful of Robert L. Crandall, chairman and president of American Airlines, is among a handful of executives who see the handwriting on the wall. Although Crandall would prefer not to return to a regulated system, he admits that "allowing all comers to fly whenever and wherever they like -- all in the name of deregulation -- is like trying to squeeze a size-7 foot into a size-5 shoe."

In Congress, patience is running out. There is a slowly generating drive for reestablishment of the CAB. Rep. Glenn English (D-Okla.) has put forward such a reregulation bill. It will have increased support as the evidence mounts that the airlines, by themselves, are incompetent to rectify the situation.

"We cannot take a piecemeal or Band-Aid approach, and solve the myriad of problems plaguing airline passengers in today's deregulated environment," says English.

Under today's deregulated system, most passengers have few choices. The handful of remaining big airlines dominates most of the major transportation hubs of the country: New York, Dallas, Atlanta, Los Angeles, Miami, Kansas City, St. Louis and Minneapolis among them.

Without a CAB to look over their shoulders, the airlines not only can boost fares, but also set stringent conditions for refunds on their cheapest fares. The latest wrinkle imposes penalties of 100 percent of the price of the ticket, if a passenger is forced to change plans.

It's time to admit that deregulation didn't pan out as advertised by its proponents. The nation needs a safe and convenient air transportation system, with an adequate number of air-traffic controllers. It should offer quality service at a fair price. What we have now approaches anarchy.