Four decades ago, Congress passed the Airline Deregulation Act, which removed federal control over the airline industry and opened the door to a market that is now driven by consumer choice. The deregulation of the industry spurred innovation and opportunity, which made air travel accessible by lowering the cost of flights and creating one of the most popular methods of travel. Ultimately, this is driving an increased number of passengers and aircraft in the skies.
To mark the 40th anniversary, Airlines for America (A4A), the trade association for the country’s leading passenger and cargo airlines, will be hosting its annual Commercial Industry Aviation Summit, with an action-packed agenda focused on the impact of deregulation on aviation and how it has shaped today’s competitive environment. The editors of Connect Aviation Today had the opportunity to get a sneak peak at the topic by sitting down with Nicholas E. Calio, president and CEO at A4A, to get his perspective. Here is what Calio had to say:
CAT Editors: The 2018 Commercial Aviation Industry Summit is around the corner and the theme is “The Accessible Age of Air Travel.” Tell us a bit about this theme and why it’s so important to today’s aviation industry.
Nicholas Calio: Since 2013, our annual Commercial Aviation Summit in Washington, D.C. has brought together aviation professionals and airline CEOs, top policy experts, union officials and financial analysts from across the nation to discuss critical elements that contribute to the industry’s safety, efficiency and success in the global marketplace.
This year’s theme, “The Accessible Age of Air Travel,” is a nod to the past and a celebration of the 40 years of progress and innovation that have ensued since 1978, when the Airline Deregulation Act was signed into law by President Jimmy Carter. This pivotal bipartisan legislation, driven by consumer advocates and passed by an overwhelming majority of Congress, uncorked consumer benefits and competition among carriers that freed access to air travel for all Americans, not just the “Golden” few.
It is thanks to airline deregulation that in today’s world, fliers are at the controls. Inflation-adjusted ticket prices have declined by more than 40 percent, including ancillary fees, and these benefits are still being realized by consumers today. Deregulation has democratized the skies, and now every traveler, shipper, and family from every demographic has access to an airline and a route that makes sense for their budget. Forty percent of Americans who fly every year have family incomes below $50,000.
Mapping the success of the U.S. airline industry over the last four decades validates the concept that effective policies today can lead to a stronger industry for tomorrow that supports quality jobs, builds businesses, and connects communities.
CAT Editors: How has airline deregulation shaped the aviation industry over the last four decades?
Calio: When I think back to my childhood and growing up in Cleveland, no one in my family or from my neighborhood flew. In fact, according to A4A’s most recent Air Travelers in America survey, in 1977 only 63 percent of the adult population had taken to skies in their lifetime. This is because, though harkened as the “Golden Age,” before deregulation, travel by plane was a luxury accessible only to the affluent few who could afford the costly government-set airfares. In 1974, for example, it was illegal for an airline to charge less than $1,442 (adjusted for inflation) for a flight between New York City and Los Angeles. That average fare for the same flight last year was $334.
Other federal mandates on air travel dictated what communities an airline could connect with new service, or what frequency of flight schedules could be offered to its passengers. Market entry for a new carrier was restrictive and very difficult to achieve.
We’ve come so far as an industry that people can hop on a cross-country flight to visit family for the weekend or order something online and delivered to their doorstep on the very same day. Post-deregulation, removing excessive government control over airlines’ day-to-day business practices put travelers and shippers first. Today, airlines and their employees compete to earn every customer, at every touchpoint in the travel experience. More people are taking to the skies than ever before. Travelers now have the right to choose which airline they prefer to give their business to, which route and flight time best serve their needs, and which variety of service options they value most.
CAT Editors: Looking forward, what do you predict the top challenges to the aviation will be in the next 5 years?
Calio: While consumers have reaped the benefits of deregulation, it’s important to note that air transportation is still the sixth most federally-regulated out of 107 industries, according to a 2016 study by George Mason University’s Mercatus Center. The industry is still subject to more than 13,000 regulations across 20 U.S. federal agencies. We need smarter regulations and we need fewer efforts from Washington to dictate how the airlines do business. More importantly, over the coming years we must continue to protect our customers from misguided attempts to regulate pricing and services across the industry that could threaten to unravel the huge consumer benefits we’ve worked so hard to deliver post-deregulation.
CAT Editors: What innovations do you see on the horizon for aviation leaders and what priorities will be driving them?
Calio: As an industry, commercial aviation helps drive $1.5 trillion in annual U.S. economic activity and more than 10 million U.S. jobs. A healthy airline industry stimulates growth and provides stability to travelers, employees and communities across the nation. This is why airlines are continuously evolving, heavily re-investing profits into their employees and boosting staffing levels, as well as innovating and enhancing their passenger products and the customer experience to meet consumer demands.
In 2017 alone, U.S. airlines invested an estimated $20 billion — or more than $24 per passenger — right back into improving the travel experience for customers, based in part on feedback they receive through direct communication with customers about what they value. This includes new and refurbished aircraft; more USB power access, better Wi-Fi and in-flight entertainment; improved airport check-in areas, baggage systems, lounges and gate amenities; innovative security lanes to improve efficiency; and continued development of mobile technology.