As head of the Civil Aeronautics Board in the '70s, Alfred Kahn, once an interventionist, opened air travel to competition. In Lesson From Deregulation: Telecommunications and Airlines After the Church, published last year by the AEI-Brookings Joint Center for Regulatory Studies, Kahn assesses the regulatory legacy. He spoke with Assistant Editor Julian Sachez in January.
Q: Why did Consumer Reports claim in 2002 that regulation failed?
A: The benefit of derugulation has been the direct savings to consumers. Airline consumers have saved over $20 billion per year, which has bought air travel within reach of people of modest means.
Consumer Reports didn't deny that rates had fallen. They just argued that rates had already been falling before derugulation. But you had huge technical innovation then, especially during the '50s, when the propeller engine was replace by the jet engine, and nothing of comparable magnitude later. All you have to do is look at the introduction of discounting in the '70s and '80s. Before, maybe 15 percent of air travel was discount fares. After, it was about 90 percent. You have to be willing to deny the nose on your face not to see that it was competition that created this revolution.
Q: What do you make of Howard Dean's call for a massive "regulation" of American industry? …