Extending Deregulation: Make the U.S. Economy More Efficient

Thirty years after passage of the Airline Deregulation Act, the U.S. airline industry is still adjusting. There’s been a lot of upheaval lately. Aloha and ATA Airlines are out of business and Frontier is in bankruptcy. Delta and Northwest are working on a merger; Continental and United are each looking for a merger.

Up on the Hill, Sen. Daniel Inouye says he plans to conduct Senate hearings to examine re-regulation. Not so fast, says Robert Crandall. He says deregulation has led to significant consumer savings and safety and that the next president should continue to promote deregulation and to open up the domestic market to allow foreign carriers to compete.

Recommendations
To help remove some of the last vestiges of such controls, the next President should:

• promote full deregulation of all voice telephone services
• oppose “network neutrality” initiatives for broadband telecommunications that would interfere with pricing innovations designed to relieve network congestion
• within the electricity sector, support market reforms (such as real-time pricing) and incentives for expanding or preventing overloads in transmission grids and distribution networks and allow states to proceed at a measured pace in deregulating electrical generation
• promote competition among airports and privatization of air traffic control in order to improve the pricing of airport landing rights and reduce air traffic congestion
• back “open skies” or “cabotage” approaches to international air travel and allow more foreign investment in domestic airlines

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