barit 1:
of interest to all. from the pen of Don Phillips.
maybe we can't unscramble the egg, but we can wonder.
Free flow: An airline deregulator has second thoughts
By Don Phillips International Herald Tribune
WEDNESDAY, FEBRUARY 22, 2006
The U.S. Congress would have killed airline deregulation a quarter century
ago if lawmakers had known the effect it would have on employees,
taxpayers and smaller cities, according to a man who helped make the bill
into law.
Tom Allison, then the chief counsel to the Senate Commerce Committee, said
the movement to allow open competition and remove restrictions on where
airlines could fly, now spreading through Europe and Asia, would prove to
be the right move over time. But it has produced so much disruption and
expense, he said, that no member of Congress would have dared vote for it
in 1980 if legislators had had a clear view of the future. And he said he
wished Congress had added significant human and financial protections to
the law.
Allison, now a semiretired attorney living in Seattle, contacted the
International Herald Tribune after reading a Free Flow column about
Jeffrey Shane, a top Transportation Department official who is shepherding
a series of regulatory changes designed to open U.S. and European skies to
much greater airline competition. At the same time, European airlines
would be allowed to invest more freely in U.S. airlines.
Allison and Shane worked together on the U.S. deregulation bill in 1979
and 1980, shortly after Allison left his position as a Senate staff member
to take a job in President Jimmy Carter's administration as general
counsel for the Transportation Department. Shane was then assistant
general counsel for international affairs.
Allison said that he had a great deal of respect for Shane and that they
both worked hard in 1979 and 1980 to shepherd deregulation through
Congress. But, he said, "I don't think Congress would have passed
deregulation if they had known what would happen."
The public now sees the effects mainly as lower airfares between big
cities, but it fails to understand some of the serious human and other
costs of deregulation, he said.
"I had no idea these things would occur," Allison said.
Airline employees in particular have suffered because of deregulation, he
said. In many cases, salaries have been cut and retirement benefits
slashed, he said, and unemployment has risen in the industry even as the
frequency of service increases.
Passengers may think they received a bargain with deregulation, and fares
have stayed relatively low on many routes between major cities around the
world, he said. But many small cities have lost air service entirely, and
the cost of flying to medium-size cities is much higher than it used to
be, he said.
"It's cheaper to fly to Paris than to Missoula," Montana, he said.
Despite all the freedom, airlines are also in terrible financial
condition, and many are in bankruptcy or just emerging from bankruptcy, he
said. At the same time, passengers suffer from a loss of service quality,
he added.
"It's not as nice as it used to be," he said.
One thing that many people overlook, including politicians, is the massive
shift of airline pension debt to the public, he said. Years ago, the
United States set up the Pension Benefit Guarantee Corporation to
guarantee that pensions would be paid even if a company went bankrupt or
went out of business.
The original expectation was that this government body would pay out a
relatively small amount of money and that a lot of that money would be
made up by seizing the assets of bankrupt companies.
But apparently, no one counted on the dumping of billions of dollars in
pension obligations by major transportation companies. U.S. transportation
companies may go bankrupt under Chapter 11 of the bankruptcy law, which
does not result in a shutdown but instead protects the company from
creditors while the company reorganizes. Thus, transportation company
pensions may be dumped on the government with no real way to recoup
federal costs.
"A private cost is shifted to a public cost," he said.
Allison said he would never go back to the days of strict regulation, but
if he could do it over he would add more safeguards for workers and the
public.
"I don't think you could go back," he said. "Once you scramble the egg,
it's scrambled."
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