The Airline Industry says “Deregulate Me!”

This from the Wall Street Journal:

“The International Air Transport Association invited top aviation officials from across the globe to Istanbul this weekend to discuss removing political barriers that prescribe everything from what routes carriers may fly, to mergers and acquisitions. International air travel is regulated by a web of some 3,500 bilateral treaties among governments.

Many airlines say these rules, which date from World War II, hurt their finances by constricting their marketing strategies, commercial development and ability to merge with or acquire rivals. Many labor unions and politicians, however, support the rules, saying they protect airlines — and therefore jobs — that might disappear in a more globalized and deregulated industry.”

Public Choice theory would be surprised to here that these past regulations haven’t benefited or protected the airline industry. So you know it is bad when the airline industry is asking for a deregulation themselves. Most of the time an industry would lobby the government to bring them protection.

Of course, that is all on first glance and once you look at the next sentence where labor unions support this it all makes sense now. Mergers and acquisitions are banned usually because the belief is one airline will dominate the industry and charge high prices. What is really funny is that they aren’t even making that argument.

Instead the argument is that the airlines would be more “globalized” and job would disappear. In Economic/ without the BS terms, this means that the airlines would use economies of scale and become more efficient. Next, the airlines might find that it doesn’t need all the workers it once had in two airlines when they combine to one. This is your average protectionist tariff argument.

Well I support the airline industry and believe deregulation will be good for the industry. It will make it more efficient and cheaper for the passengers.

The rest of the article is here.



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