I may not win a lot of friends with this post … because I perceive an awful lot of fellow Americans who get so angry at the thought of government regulation that they quite literally “throw out the baby with the bathwater”, but here’s a post from my blogging friend Don Brown that I recommend.
Do you ever wonder what the difference is between the airline business of today and the airline business back when Pan Am, Eastern, Southern, Republic and Western will all in business ? I mean, besides deregulation ? I dare you to read this list, look at the dates and think.
Braniff International Airways (1928 – 1982)
Capitol Airways (1946 – 1982)
Eastern Air Lines (1926 – 1991)
Frontier Airlines (1950 – 1986)
National Airlines (1929 – 1980, to Pan American World Airways)
North Central Airlines (1939 – 1979, to Southern Airways)
Northwest Airlines (1927 – 2010, to Delta Air Lines)
Ozark Airlines (1943 – 1986, to Trans World Airlines)
Pacific Southwest Airlines (PSA) (1945 – 1987, to USAir)
Pan American World Airways (1927 – 1991)
Piedmont Airlines (1940 – 1989, to USAir)
Reeve Aleutian Airways (1932 – 2001)
Southern Airways (1943 – 1979, to Republic Airlines)
Texas International Airlines (1944 – 1986, to Continental Airlines)
Trans World Airlines (1930 – 2001, to American Airlines)
Western Airlines (1925 – 1987, to Delta Air Lines)Airlines that were in business for 30, 40, 50 years or more were ruined. The list tells more than that single story. Look at how many airlines started after deregulation and didn’t survive. Every single one of them took a little piece of a healthy airline with them. It is madness. Yet we continue.
Regulation wasn’t perfect. But at least people could make a living in the industry (my emphasis). And the industry could survive. Full text of Don’s post illustrating how deregulation has killed America’s airline industry.
So what has this to do with living in the Philippines, or retiring in the Philippines, or working in the Philippines as a foreigner or a Filipino?
photo credit: Ack OokA lot. Because of its geographic location, the Philippines is unusually dependent upon air travel. And the way the US is heading now )and how the US heads, so does the rest of the world), we are rapidly closing in on the apparent goal of only one airline, nationalized by the government as an “essential pubic service”, run by the lowest paid (and thus lowest common denominator management) equipped with the cheapest airplanes and manned by the most poorly paid (and thus also lowest common denominator pilots).
Think deregulation id the be all and end all of solving business issues? read the list, and think also of my comments about the stifled murmur of the passing of the giant Northwest a few days ago, and then think again.
You want the US to be number one in the world? Then let’s start by putting some number one corporate and government management back in place.
Popularity: 3% [?]
OK, fine. I erred when I said the Australian government owned airlines. If they have divested themselves from all their holdings, fine well and good. I stand by the thoughts on the type of CAB/FAA we formerly had in the USA, which was the thrust of the article. Be well.
Dave you’re not under my skin, I’m just setting the facts straight about my own country. Maybe we are at cross purposes about the meaning of ‘nationalisation’. I’m using the word in the ordinary sense, the same way as Wikipedia does: ‘the act of taking an industry or assets into the public ownership of a national government or state’. That is simply not the case in Australia with respect to aviation.
The Wall Street Journal article you link to is about limits on foreign ownership of Qantas. The same laws apply to all large Australian-owned companies, and mean that government approval is required before a publicly-listed company majority-owned by Australians is sold to foreign interests. It doesn’t mean the government owns the companies, any more than Filipino limits on foreign ownership of property mean that land in the Philippines is ‘nationalised’.
I seem to have gotten under your skin here, ken, but I assure you my concept of who owns what in Australia is not so far out of whack as you allege. see:
http://online.wsj.com/article/BT-CO-20091215-716655.html
from just a couple;e months ago.
The government in Australia regulates airline ownership undoubtedly, wether or not more so or less so than in the US I can not say.
To be more clear the deregulation I am talking about in the USA refers to the alsmot complete relaxing of any rules on competition by US airlines (foreign carriers are still very much regulated). This has resulted in a windfall to consumers as prices dropped to nargain basement rates, but may be coming home to roost in that there is less and less choice for the consumer every year. In short, RIP, Northwest, ni matter how actually pulled the trigger.
Dave I think your information about Australia is way out of date. The government sold Qantas 20 years ago and there is no public ownership of either airlines or the major airports. There is vigorous competition between a number of airlines for both domestic and international customers. The only remaining government restriction is on the Australia-USA route where most airlines continue to be locked out, but that too is crumbling.
When the industry was deregulated, fares plummeted. One of the two airlines that had enjoyed cosy duopoly benefits went broke, which was a shame for the employees. However most of them soon got jobs with the new airlines that came in to compete with Qantas (the second biggest carrier is now Richard Branson’s Virgin Blue, although he sold a lot of it to an Australian company).
The most important result is that fares have stayed down and made air travel economically feasible for ordinary Australians. The only people who really suffered were the small number of employees (especially pilots) who could no longer extort ridiculously high salaries from the public courtesy of guaranteed jobs for life. I’m not a mindlessly ideological supporter of free markets come what may, but in the case of aviation I think the benefits of competition have been unquestionable and substantial.
Our only real disagreement, Ken, is caused by our perspective. Airlines ahve been antionalized in effect if not in name in Australia for years. In the US I would submit the airlines are hardly regulated at all now, in comparison to the days of the CAB .. who, amonf other things, insured that 300 flights per hour could not be scheduled into an airport with a capacity of 100.
However, disgreement fuels the world … what’s sad about my USA today is so many ‘believers’ who jump on some political bandwagon or another without a thought as to what it really means.
Pretty telling, though, that every airline on that list has foundered since Ronald Reagan’s time, when he removed commerce regulation. Some love the man and say his ideas are right … I allow anyone to hold their own beliefs, but just look at that list and tell me that deregulation was good for US airlines. I’ll disagree there for sure.
Also as a man from a country where in general the government protects workers .. remember that virtually every person on that list … those airlines were all people, mind you … lost all or most of their pension, becuase another thing the ‘great communicator’ did for Americans was to relieve corporations from honoring their pension comitments. Oh well …
Also, given the number of recent airline accidents that are caused by just plain lack of interest in safety and “lowest common denominator” flight crews, this may be of some interest:
Sorry Dave but I have to disagree. Airlines continue to be heavily regulated – that’s why flying is much safer than driving your car. Opening aviation up to competition has, however, caused inefficient airlines to fail in the face of competition from better-performing outfits, with the result that air travel is now vastly cheaper than it was even 20 years ago, let alone 50.
Aviation is pretty much a textbook example of the benefits of market competition to customers, in my book. And IMHO your description of the horrors of a nationalised airline are way off beam; for comfort, safety and efficiency my carrier of choice is Singapore Airlines, a wholly owned subsidiary of the government of Singapore.
This is so true. I am the last person to think that we need to regulate the world, but the airline industry, the banking industry, and on and on are prime examples where we should be providing at least some level of regulation.
Yep. All one has to do is look at the airlines that have failed after de-regulation versus those who were around during the time when government regulation was allegedly “killing business” and one can draw their own conclusions.