IN THE '50S and '60s, when I was growing up, air travel was a luxury. People dressed up as if going to church. There were lots of empty seats, so on night flights you could often get a row of three together and sprawl out. There was ample legroom, and full meals were served in coach.
My family and I were able to take vacations by plane only because my dad worked for an airline, and we flew on company passes when space was available. Since planes were typically only half full, we nearly always got seats on our chosen flights. But we were some of the lucky few.
Flying was a luxury because it was expensive, and it was expensive largely because of detailed federal economic regulations governing how air carriers could operate and, importantly, what they could charge. The government treated airlines as a kind of public utility and regulated them under the rationale that dog-eat-dog competition would threaten profitability and lead to skimping on safety.
Back then, the Civil Aeronautics Board (CAB) allowed only one or two airlines to serve a given route. It also unilaterally set airfare rates, seeking to keep them high enough for the airlines to stay safely in business. No price competition was allowed, which meant no incentive for carriers to seek out greater efficiencies and pass the savings to consumers. Economists described the situation as a government-sponsored airline cartel.
The result was a huge amount of waste--and a mode of travel that was out of reach for millions of people. In 1977, the year before deregulation, only a quarter of adult Americans took a trip by air, compared with nearly half in 2017. And only 63 percent had ever flown in 1977, compared with 88 percent today.
The Airline Deregulation Act of 1978 laid the groundwork for all these restrictions to be swept away. If you've set foot on a commercial airplane in the last four decades, you probably have that law--and the many people who pushed for it--to thank.
A BONANZA FOR PASSENGERS
MY VERY FIRST Reason article, in 1969, argued that airlines should be allowed to fly wherever they wanted and charge whatever prices they thought sensible. My dad, then a facilities engineer at Eastern Airlines, read the article, laughed, and told me that would never happen.
Nine years later, the impossible did happen. Congress moved to phase out price and entry controls and set a date--January 1, 1985--for the CAB to disband, which it did, on schedule.
Airline deregulation had many fathers. As early as the mid-1960s, economists were studying airline markets within California and Texas--since the flights didn't cross state lines, they were not subject to the same regulations--and finding that competition led to more affordable prices.
That work came to the attention of a Harvard law professor knowledgeable about regulatory policy, Stephen Breyer, who joined the staff of a congressional committee headed by Sen. Ted Kennedy (D-Mass.) in 1974. At the time, the CAB was under media scrutiny for imposing a moratorium on new airline routes, and Breyer urged Kennedy to hold hearings. They happened in 1975, helping to win support for deregulation from a diverse set of players including Ralph Nader, Common Cause, the National Association of Manufacturers, and the National Federation of Independent Businesses.
United Airlines played a uniquely important role. After repeatedly being denied access to new routes by the CAB, it broke with the other major carriers and refused to support the status quo. The company pushed for reform starting in 1974, which prevented the airline trade association from choosing sides, since its policy was to take positions on policy issues only if all member airlines agreed.
Breyer--who would later be appointed to the Supreme Court--related the whole story of how airline deregulation came about as a chapter in Instead of Regulation, a 1982 book I edited for Reason Foundation, the nonprofit that publishes this magazine. As he noted there, the 1978 law "did not mark any new beginning...