Proponents of the Airline Deregulation Act of 1978 often point to the relatively low prices in the industry today as proof that deregulation was a success. But this week‘s guest on Sea Change Radio, Bill McGee believes that the connection is specious at best, and that advocates are making the mistake of confusing cause and effect. McGee, a consumer advocate in the aviation sector and a senior fellow at the American Economic Liberties Project, shares his perspective about the long-term problems created by airline deregulation, explains why it often gets credited for saving the industry when it shouldn’t, and looks at how sustainability is not a big enough factor in the way that airline prices are determined.

Narrator| 00:02 - This is Sea Change Radio covering the shift to sustainability. I'm Alex Wise.

Bill McGee | 00:18 - So if you just look at a chart and say, oh, since 1978 airline safety has improved. Well, statistically, it absolutely has. But it was improving long before that. And the, and in fact, the improvements before 1978 were much greater. 

Narrator | 00:34 - Proponents of the Airline Deregulation Act of 1978, often point to the relatively low prices in the industry today as proof that deregulation was a success. But this week's guest on Sea Change Radio, bill McGee believes that the connection is specious at best, and that advocates are making the mistake of confusing cause and effect. McGee, a consumer advocate in the aviation sector and a senior fellow at the American Economic Liberties Project, shares his perspective about the long-term problems created by airline deregulation explains why it often gets credited for saving the industry when it shouldn't, and looks at how sustainability is not a big enough factor in the way that airline prices are determined. I am joined now on Sea Change Radio by Bill McGee. He is a senior fellow at the American Economic Liberties Project. Bill, welcome to Sea Change Radio. 

Bill McGee | 01:44 - Thanks very much, Alex. It's a pleasure to be here.

Alex Wise (AW) | 01:47 - So the American Economic Liberties Project, AELP, what is its mission? Why don't you give us a brief snapshot of the organization, if you can? 

Bill McGee | 01:55 - Sure. AELP is about five years old. It's a Washington based nonprofit think tank. And, uh, the mission is really simple. We fight monopoly power where wherever it occurs. So I have colleagues that are fighting monopoly power in financial services, healthcare, uh, Ticketmaster, when you're getting your Taylor Swift tickets and, uh, you know, the market is too consolidated to get a better price. And of course, I handle, um, airlines and travel and airlines, which consumes overwhelmingly most of my time is an industry that is, as you know, uh, overly consolidated. It's basically an oligopoly at this point with four major carriers controlling 80% of the market. So we fight that power, and we're always trying to find ways to increase competition and make life better for consumers. 

AW | 02:43 - So I was surprised as I dug into the history of deregulation. I always thought it was a Reagan era initiative, but it preceded Ronald Reagan. It was a Carter administration policy from 1978. Why was I confused about that? That's not an uncommon mistake to make, is it? 

Bill McGee | 03:03 - Not at all. Alex, I can't tell you how many times I've written about deregulation. And in the comments below, people will write, thanks, Reagan. The fact is Reagan wasn't even in office, as you pointed out in 1978, Jimmy Carter was president, a Democratic president, and both the House and the Senate were controlled by Democrats. That's where deregulation came from. It actually was spurred by the left, not the right people. Like Ralph Nader testified in favor of it. Senator Ted Kennedy introduced the bill in the Senate. To just step back a moment, the industry was regulated from 1938 to 1978. And I think there's a lot of confusion over that too. What does that mean? I mean, all industries are regulated in some ways, but what it was was that for 40 years from before World War II until 1978, uh, the Civil Aeronautics Board determined where US airlines could fly. How many passengers they could carry on flights, how, how many flight frequencies in a day to a given destination, and the prices, the fares. And so, uh, the thinking in the seventies from the right as well, of course, 'cause there was a lot of support among Republicans and, and, and, uh, the business community for deregulating the early industry. But the thinking from the left was that this was going to sort of, um, open up the free market and good things were gonna happen. We're gonna see more competition, more carriers, lower fares, better service. They would be competing more. Um, if you read the actual act, you know, it's funny how often we have discussions in this country about documents, the Constitution, for example. But in this case, the Airline Deregulation Act and people don't read it, which is, is always kind of shocking to me. If you read the act, the very first sentence, which is a very long sentence. 'cause it's a preamble to the act. It speaks all about the promises that were made to us in 1978. And if you read those promises, I don't see how any reasonable person can't conclude in 2025 that deregulation was a failure because what they promised us in 1978, we were gonna see more competition, more airlines. We have seen the opposite since then. We are now at the most consolidated, uh, in, in air travel in this country that we have been since the first tickets were sold before World War I, the first airline flight operated in 1914, we have now 11 scheduled passenger airlines in the United States. For context, we had about 75 in the mid eighties. We have four airlines at the top, American, Delta, Southwest, and United that control 80% of the market. It's an oligopoly, especially among the big three American, Delta and United. And we have never had that much concentration of power at the top. And furthermore, we have just gone 18 years since 2007 with only two new entrant scheduled passenger airlines, Avello and Breeze. That again, is a broken promise of deregulation. We were supposed to see all these new entrants, all this competition we did for a while in the eighties through consolidation, through bankruptcies. Overwhelmingly, most of them are gone. And so now we're left with 11. But again, those four at the top, they really, they really steer how things go. 

AW | 06:12 - And there's a lot of arguments made out there that deregulation was a good thing. You spend a lot of your time trying to par those arguments. Most notably, I've read a piece that you wrote, refuting Clifford Winston, who had written a piece about this as well as Matthew Iglesias, who they tend to point to the relatively low prices we still enjoy in airline travel as the reason why deregulation worked, but still emerging technology in 1978, we still were building airports and airplanes. There was no direct flight from San Francisco to London, let's say in 1978. There this technology was still in its, um, infancy in many ways. So the idea that prices have kind of stayed the same or gone down, and as you point out, not necessarily gone down because of all the hidden fees, it's really a case of confusing cause and effect in many ways, isn't it? 

Bill McGee | 07:13 - Yes, I think that's accurate, and that's, that's the point I made in the AELP substack, uh, responding to, uh, Matthew Glace recently. And the point that my colleague Lee Hepner and I made in response to Winston, the fact is that there are proponents of deregulation, including airline lobbyists who will act as if the Wright brothers invented the airplane in 1978. What I mean by that is they show you charts and graphs. What has happened since 1978? We say, let's go back and look before that. If you look at the history of the industry, and these are statistics that are irrefutable from, from the Department of Transportation, from the airline lobbyists themselves, from, from sources that no one questions from Boeing. You see that the major sea change have come from technology, from advancements aircraft long before deregulation, 20 years before in 1958. It's generally accepted that that was the beginning of what is called the jet age. That's where the first successful commercial jets, there were a few unsuccessful attempts before that, um, Boeing 7 0 7 and, and Douglas DC eight premiered in 58. They did many things at once. One, they became much safer. The safety record of fatal accidents plummeted, thankfully in 19 59, 19 60, and continued plummeting throughout the, the decade since that's due to technology. It had nothing to do with the market. The fares, as you mentioned, started dropping them. Why? Because jet aircraft were more efficient. And they were not only safer, but they had larger, uh, passenger loads. They were able to, for the airlines perspective, the cost was lower to carry more people further distances. That then was compounded in, in a good way, a decade later, 19 69, 19 70, 71, we started seeing the first wide body aircraft. Definition of a wide body is simply two aisles instead of one. The 7 47 from Boeing, the dc 10 from McDonald Douglas, the L 10 11 from Lockheed. And again, more people going further distances, costs went down. These trend lines were in effect well before 1978. So if you just look at a chart and say, oh, since 1978, airline safety has improved, well, statistically, it absolutely has. But it was improving long before that. And the, and in fact, the improvements before 1978 were much greater. 

AW | 09:40 - And the price drops were as well. You, you mark in that piece, you said like from 72 to 78, you see this pretty steep price drop, right? 

Bill McGee | 09:48 - Airfares in the United States were falling more quickly prior to 1978 than after 1978. Now, as far as you know, this,