| Send to Printer | << Back to Article |
| Commentary |
|
Steven A. Morrison and Clifford Winston: Allowing foreign airliner would benefit everyone
WASHINGTON -
This fall the United States will celebrate the 30th anniversary of the Airline Deregulation Act of 1978 — and the nation does have reason to celebrate because airline deregulation has benefited both travelers and carriers. Among the most important benefits: Fares have fallen significantly, flight frequency has increased and carriers have become more efficient. Moreover, these benefits have been realized while air travel safety continues to improve. However, it would be misleading to conclude that the industry’s adjustment to deregulation — and the extent of deregulation — is complete. Airline industry earnings have fluctuated greatly since deregulation and the industry has yet to earn a normal rate of return on invested capital on a consistent basis. … With one swift stroke, deregulation of international markets would spur competition on international routes and possibly eliminate a major motivation for some prospective mergers. The recent Open Skies agreement with the EU is a positive step that should be replicated by the United States with all regions of the world. Government-mandated limits on foreign ownership of U.S. carriers should be eliminated, which would make it easier for struggling U.S. carriers to attract foreign capital to help solve their financial problems and possibly eliminate another major reason that carriers seek a merger. Allowing foreign carriers to serve U.S. domestic routes would provide another source of competition that would benefit air travelers. Think of how foreign transplants have transformed the automobile and steel industries to the benefit of consumers. Still another source of competition could be developed by allowing foreign investors to establish a new U.S. carrier without any limits on foreign ownership of the carrier. Finally, policymakers could potentially stimulate airline competition by experimenting with privatization of some U.S. airports, thereby allowing them to compete aggressively for air carrier service. brookings.edu/testimony/2008/0424_airlines_winston.aspx |