President Carter urged Congress yesterday to reduce federal regulation of the nation's airline industry.
In a message to Capitol Hill the President said the current regulatory scheme - in which the Civil Aeronautics Board exercises substantial control over routes the airlines fly and prices they charge the public - was designed almost 40 years ago "to protect a developing industry" and is outdated.
"Regulation, once designed to serve the interests of the public, now stifles competition," the President said. "It has discouraged new, innovative air carriers from offering their services and it has denied consumers lower fares where they are possible."
Carter specifically endorsed a number of legislative objectives embodied in a bill jointly introduced in the Senate by Aviation Subcommittee Chairman Howard M. Cannon (D-Nev.) and Edward M. Kennedy (D-Mass.) and soon to be introduced in the House by Aviation Subcommittee Chairman Glenn M. Anderson (D-Calif.).
The President's strong backing and pledges by administration officials, including Transportation Secretary Brock Adams, to work hard for passage enhance the prospects that Congress will enact a measure this year increasing competition in the airline industry.
Although as recently as Wednesday in a Washington Post interview, Adams had expressed some reservations about "disruptive" effects that reduced regulation might cause he appeared a wholehearted supporter at a White House briefing yesterday.
He said he would oppose legislation that would remove all government regulation of the airline industry but would work for "bringing competition in and reducing the amount of federal government interference with the market system proposed in the President's message and conceptually put together in the Cannon-Kennedy measure.
"This is a carefully worked out approach and I think it will work."
In his message, the President took note of a general Accounting Office report last month which concluded that air fares are between 22 and 52 per cent higher with federal regualtion than they might be if the airlines were operating in a more competitive environment.
Under the current regulatory system, the airlines vie for customers by offering more flights than their competitors, attractive flight attendants, free drinks, first-run movies, gourmet deal, and comfort - but not generally by offering cheaper flights. The "frills" increase the airlines' cost of operations, but not their efficiency nor necessarily the total number of customers.
The President urged Congress to enact "by summer" legislation that would allow the airlines to set what prices they want after an initial phase-in period, with a minimum amount of regulation needed to prevent "predatory, below-cost pricing."
He said the legislation should also:
Allow the airlines to be governed by competitive market forces, "not the decisions of a government bureaucracy."
Allow easier entry into the industry by new carriers and allow existing carriers easire access to new routes.
Protect small communities against the loss of needed air service.
Adams and Stuart Eizenstat, assistant to the President for domestic affairs and policy, emphasized at the briefing that the administration would support the use of federal subsidies to assure continued service to smaller communities. They said, however, that they favor reform of the current program under which the CAB pays local service airlines about $70 million a year to serve small cities that might otherwise lose service.
Sen. Cannon and Rep. Anderson yesterday welcomed the President's support and pledged to move a bill encompassing Carter's program through Congress as quickly as possible.
CAB Chairman John E. Robson, whose agency would lose much of its workload with passage of the legislation, also, welcomed the President's for support. "I'm pleased that President Carter sees this as it is - a nonpartisan economic issues," he said.