If you've had occasion to purchase airline tickets lately, you may have encountered a shock: many flights of just a couple of hours duration will cost you 50 percent over what you paid a year or so ago. But you can get a relative "bargain" going cross-country, especially on excursion rates.
The airlines blame more expensive full-fare tickets on higher aviation fuel costs. (Are new and lower prices coming with the oil glut?) But expert testimony from the Civil Aeronuatics Board shows that the distorted price structure has been caused by one thing and one thing alone--deregulation of rates.
It is more than slightly ridiculous, for example, that one must now pay Northwest Airlines $317 to fly round-trip from Washington to Madison, Wis. ("super-saver" rate), while the round-trip super-saver fare between Washington and Minneapolis (227 air miles beyond Madison) is only $270 on the same airline.
What airline deregulation has done is encourage cutthroat competition on transcontinental and long-haul routes, resulting in excess capacity and "bargain" fares on those routes. And who subsidizes these below-cost rates? Those who have to travel shorter distances or on intermediate routes, or who need to "combine" their routes.
David Richards of the CAB staff told a House committee a year ago that to say deregulation "even approaches being a success with this type of discriminatory pricing is a travesty."
Recently, in connection with World Airways' petition to the CAB to prohibit below-cost transcontinental rates that threaten to put it and other small airlines out of business, I suggested that deregulation had proved to be no panacea. This argument is rejected not only by President Reagan's deregulators but by the Keynesians at the Brookings Institution. On the transportation issue, they are just as free- market oriented as, say, Murray Weidenbaum, chairman of the Council of Economic Advisers.
I would like to have Weidenbaum, or Joseph Pechman at Brookings, explain the economic rationale for a cheaper Washington-Minneapolis fare than a Washington-Madison fare, or to justify the following: Washington-Miami, $221.90 for 928 miles against Washington-Dallas-Ft. Worth, $138.10 for 1,189 miles. Or, Washington-Denver, $276.19 for 1,480 miles, against Washington-San Francisco, $319.05 for 2,430 miles (all regular one-way coach fares).
An articulate and well-informed minority understands that the free-market issue is a phony when it comes to deregulation of transportation. Unless somebody cuts corners on services or safety, deregulation doesn't lower prices, overall, to the consumer.
"If three airlines offer me a seat from New York to Los Angeles, on flights scheduled in close proximity to meet peak demand, I am 'free to choose' one of the three," Frederick C. Thayer of the University of Pittsburgh, wrote me. "Assuming flights run on time, two must now fly with empty seats."
Thayer, a maverick academic who has been writing on this topic for 25 years, says that the net result is that this excess capacity "is destroyed as part of the competitive struggle."
So be it, say the free-market purists like former CAB Chairman Alfred E. Kahn, who successfully pushed airline deregulation under President Carter. But Kahn initially argued that it was excessive regulation that had caused the airlines' empty-seat problem. Go to open competition, Kahn said, and you'll fill up the seats. We are still waiting to see that promise fulfilled.
"Would District of Columbia residents be better off if you had four Metro systems instead of one [rapid transit rail line]?" Thayer asks rhetorically. "When 'bullet trains' arrive in the United States, will we prohibit them until we can build five sets of parallel tracks to insure enough competition?"
He also raises an issue even more disturbing than the weird economics of rate deregulation --safety. The greater the number of carriers on any given route, Thayer suggests, the more inefficient the overall operation. One result: "Uncoordinated and sloppy 'cartelizing', as in the Air Florida-American Airlines fiasco at National Airport," where American Airlines ground-handlers serviced the ill-fated Air Florida 737 that crashed into Washington's 14th Street bridge.
"To accomplish added training for the American ground-handlers (unfamilar with Air Florida procedures) would have cost more money, and Air Florida could not afford a complete staff at the airport. In other words, deregulation is both inefficient and dangerous."