The American Economic Liberties Project released its white paper on how to fix the airline industry in late January. It was co-written by Ganesh Sitaraman of Vanderbilt University, author of Why Flying is Miserable and How to Fix It, and William McGee, author of Attention All Passengers: The Airlines’ Dangerous Descent and How to Reclaim Our Skies.
The paper is called “Economic Liberties and Vanderbilt Policy Accelerator Release Blueprint to Fix the Airline Industry.”
I was able to talk to William McGee recently, and that’s an accomplishment itself, because it seems lately that nearly everyone wants to hear what he has to say about the airline industry. And that fact itself points to a sea change.
McGee spent 22 years at Consumer Reports, first as the editor of Consumer Reports Travel Letter, and since 2009 as the Aviation Adviser for Advocacy. He testified before Congress many times on airline mergers, competition, safety, and passenger rights. Many times, he was the sole consumer advocate on transportation.
“In all my years as a consumer advocate, I have never have I seen a response like this,” he said.
“When we went to Washington to officially unveil the paper, Ganesh and I met with Secretary Buttigieg, at the DOT. He had read the whole document, which was impressive, and engaged in a real conversation. He had members of the DOT and FAA staffs in the room with us. Then we had a briefing with White House officials. And then the next day, we gave a briefing to congressional staffers of both the House and the Senate, and both Democrat and Republican.”
The tide seems to have turned, with members from both parties now paying attention.
“We are seeing bipartisan interest in this,” said McGee. “In recent years, I’ve seen something I’ve never seen before. I’m talking to more members of both parties than I ever have before as an advocate in all the years I was at Consumer Reports. There’s no way 10 years ago we would have had all those meetings, as well as numerous follow-up conversations.”
They no longer have to make the case that the airline system is broken.
Sea Change
“Our position that we’ve staked out is ‘How to fix the airlines,’” he said. “It’s obviously broken. It’s a given. Who could credibly argue that this industry is not broken? Let’s talk about fixing it. It’s time for a real conversation.”
As consumer advocate for the Consumers Union, McGee testified before Congress on many occasions against airline mergers, all of which went through with practically no resistance. It often seemed like a Don Quixote venture with no hope of success.
McGee recalled how when he would finish testifying at one of the hearings, people would congratulate him, saying, “That went well,” as if referring to his having given a good performance. But the mergers always went through without a hiccup. It was as if no one ever had any hope of really making any difference in regard to the airline industry.
The airlines are too entrenched. When they appear in congressional committee to ask to merge to ever larger entities, they are regarded with something like reverence by members of Congress. The hearings seemed to be just formalities, because everyone knows the mergers are going through. They always went through. Even that has changed, with the DOT’s opposition to the Jetblue-Spirit merger.
Often the airline executives would make arguments that said, in effect: You let those two airlines merge and now they are bigger than we are, so you have to let us merge too so we can be bigger and more competitive.
But that’s not what the word “competitive” means, as it is used in antitrust law. The idea is to make the marketplace more competitive, not to strengthen a few major carriers to make them individually more competitive.
But for many years this logic prevailed. Almost no one wanted to challenge deregulation. It was sacrosanct, the religion of the Free Market.
Bipartisan Support
It wasn’t Republicans against Democrats. Practically everyone was for deregulation. As McGee explains to anyone who is listening, deregulation was introduced by Democratic Senator Edward Kennedy in 1975 under the Republican Ford administration, passed under the Democratic Carter administration, with Democratic control of both houses of Congress. It had broad bi-partisan support through the years it was debated before being enacted as Airline Deregulation Act (ADA) in October 1978. And deregulation has continued to have almost unanimous support in the upper echelons to the political and business worlds.
But recently there seems to be a crack in the edifice. Suddenly people in Washington are listening to arguments that the airline industry needs to be fixed.
Written Into the Law
In working on the white paper, McGee spent the better part of a year studying the Deregulation Act himself. Oddly enough, his argument is made succinctly in the very first sentence of the 372-page document.
“It’s written in the act,” he said. “What were we promised? The very first sentence predicted that the ADA would foster ‘maximum reliance on competition.’ And ‘the avoidance of unreasonable industry concentration.’ And ‘the encouragement of entry by new air carriers.’
“When I read that, I almost fell off my chair,” he said. “It’s in the very first sentence. I don’t see how anyone can read that, and if they are intellectually honest, not agree that it failed.”
With four giant corporations controlling 80 percent of the $107 billion U.S. airline market, we have achieved just about the opposite of what the act promised to do.
“It was an experiment,” he said, “and I would argue that it failed. I don’t fault them. So many were in favor of deregulation. Ironically, those who were opposed were airline CEOs. They didn’t want to have to compete.”
Well, there’s one thing that hasn’t changed. But now the few surviving airlines have the market nicely divided into their respective hubs, so competition isn’t a big problem for them. They can peacefully coexist, while they keep new entrants from disturbing the waters.
“We aren’t saying we have all the answers,” he said. “If you have a better idea how to fix it, let’s hear it. We just want to have the conversation. But no one can say the system doesn’t need fixing.”
Back to the Roots
When airline deregulation was being considered it was a genuinely national discussion.
“There were so many hearings,” said McGee. “Anyone with a stake in airlines got to testify. There was a long, robust debate that went on for a year. There were cover stories in Time and Newsweek, and prime time news specials on TV.”
It’s time to return to that conversation, says McGee. And surprisingly many in Washington now agree.
So what changed? It seems things built to a climax and pushed the pendulum so far in one direction it reached its limit and started to swing back. Have we reached the proverbial tipping point?
“The thing about a tipping point is — unless you’re a psychic, no one can predict when there’s going to be a tipping point… But I think something changed in 2022. It was built during the COVID lockdown period. The year 2021 was the first year people started to fly again. Then in 2022, it was like someone fired a starting gun in a race. And not incidentally, 2022 was the worst year for airline operations and customer service in my view in the history of the US industry. I’m not talking about safety, but performance: delayed flights, canceled flights, unpaid refunds, terrible customer service, all of that.
It culminated when Southwest had that epic meltdown.
“Southwest stranded at least 2 million flights at Christmas and New Year. It could have been 3 million. It was, from one single airline, the largest meltdown we’ve ever seen. I’m not talking about 9/11 or a blizzard when everybody shuts down, it was just internal problems. By end of ’22, I never heard in my life so many people say to me, ‘What the hell is wrong with this industry?’”
In January 2023, the New York Times published McGee’s op-ed titled It’s Time to Finally Fix Airlines.
“In that op-ed we brought up for the first time publicly the D word, ‘deregulation.’
“After seeing that epic awful year, who in their right mind could say it doesn’t need fixing? Everybody knows.”
McGee will speak at the ASTA Global Conference in Dallas May 29-31.
David Cogswell is a freelance writer working remotely, from wherever he is at the moment. Born at the dead center of the United States during the last century, he has been incessantly moving and exploring for decades. His articles have appeared in the Chicago Tribune, the Los Angeles Times, Fortune, Fox News, Luxury Travel Magazine, Travel Weekly, Travel Market Report, Travel Agent Magazine, TravelPulse.com, Quirkycruise.com, and other publications. He is the author of four books and a contributor to several others. He was last seen somewhere in the Northeast US.
