Airline Deregulation
Most people, though presumably not most people who read this blog, aren’t interested in politics. They’re not interested in politics because they find political concerns to be remote from their lives. To me, though, it’s interesting to really understand how false that is, and how policy shifts about even very dull issues actually tend to have far-reaching consequences.
Consider airline deregulation. This was a complicated and multifaceted process, but the basic thrust of it was to increase the quantity of competition between airlines and to make it easier to compete on the basis of price. The result has, as intended, been a steep structural decline in the cost of air travel. But that, in turn, has had an interesting side consequence. Previously, airlines barred from competing on the basis of price engaged in fairly vigorous competition on the basis of service quality. So while products generally get better over time, the quality of air travel has deteriorated rapidly as a low-cost, low-quality equilibrium has proven to be consistently more profitable. It seems that that tradeoff has been good for tourists and people traveling to visit family because, evidently, that’s what consumers would prefer. But it’s been a disaster for business travelers since cheaper flights are worthless if you’re not paying for them, and crappy service is crappy.
Michelle Higgins’ New York Times article on the declining fortunes of the flight attendant ought to be understood as another consequence of this shift. In a world where firms are barred from competing based on price, they’ll compete based on quality. And firms competing based on quality need to be fairly generous to their employees — high-quality service requires a first-rate workforce which requires attractive compensation and working conditions. But as shift to price competition and everything looks different — priority number one is to cut costs as low as possible, and you don’t really care if that leads to high turnover or you not being able to hire the best people.
49 Responses to “Airline Deregulation”
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September 14th, 2008 at 3:12 pm
But it’s been a disaster for business travelers since cheaper flights are worthless if you’re not paying for them, and crappy service is crappy.
That’s ridiculous. It’s not like someone isn’t paying. It’s a boon for business. It saves money and allows for more travel, which in the end is good for those business travelers even if the service is of lower quality.
September 14th, 2008 at 3:14 pm
There’s one other tradeoff to consider. If the price of flights had remained higher over the last few years, there’s no way the volume of air travel would have been as high as it was, and that would have also reduced employment in the industry (now, granted, the jobs that never were are of a different sort than jobs that were lost, both politically and socially – and for that matter economically).
September 14th, 2008 at 3:16 pm
The American public decided about 28 years ago that what it wanted was cheap airfare at any cost. The got what they demanded, and now they loath what they desired.
You write that “low-cost, low-quality . . . has proven to be consistently more profitable.” That’s true provided by “more profitable” you mean “forcing airline after airline into bankruptcy or completely out of business.”
Way back in the dark ages, the Civil Aeronautics Board guaranteed each airline a profit. The only restrictions were 1.) nobody could compete based on fares, and 2.) the CAB would dictate which airlines had to serve the smaller cities that would otherwise not be profitable. All of this regulation came about in response to cutthroat airline wars back in the late 1920s and early 1930s that nearly destroyed both the airlines and the American aircraft industry. Those regulations helped to make the American airline industry the envy of the world, and helped foster the American airplane industry during non-war years.
Fast forward to 1978, and the right wing is in full voice about the evils of all those New Deal regulations. The airline industry, lead (ironically) by Eastern, Pan Am, Continental, and a host of smaller carriers, pushes hard for deregulation. Within 10 years of deregulation being passed, Pan Am and Eastern ceased to exist, Continental had lurched into bankruptcy, and most of the smaller carriers were either eaten or killed off. We used to have four major airliner builders in the U.S.: Boeing, Douglas, Convair, and Lockheed. Today we have just one, and it’s struggling mightily.
Do you think maybe deregulation wasn’t such a hot idea? That this was perhaps one case where government-guided capitalism was best for everyone, including consumers?
September 14th, 2008 at 3:19 pm
“…low-cost, low-quality equilibrium has proven to be consistently more profitable.”
That’s true provided that “more profitable” means “lead to bankruptcies and airlines going out of business at the fastest pace in the depression.”
September 14th, 2008 at 3:19 pm
I asked my friend Farnsworth Lodge Cabot, who had to sell his Gulfstream when his hedge fund tanked, what he thought about this subject, and thus spake he: By all means, let’s go back to the days when the proles couldn’t afford to fly. The food was pretty good and the planes weren’t crowded. Now it’s (ugh) like riding the bus.
September 14th, 2008 at 3:19 pm
I think you need to be careful in lumping all business travels together as one group. Most of the business travelers I know who travel a lot (a key distinction) find air lines still treat them very well. Even for those who don’t buy first class tickets all the time still receive quality service. Just look at the Star Alliance members (elite and gold). They never wait in substantial lines, get priority baggage, have access to lounges, sit in better seats (at the front in the aisle), pay less, and receive thousands of points to cover all of their family travel. The only business travelers that “suffer” are those who travel around once a month or less and buy second class tickets.
September 14th, 2008 at 3:32 pm
Matt raises the interesting point that deregulation and the devaluation of quality service may have led to the ugly, irritating and unpleasant stewardesses that populate U.S. airlines compared to the sweethearts and hotties one finds on European, Asian and Latin American flights. I just blamed feminism, which may not indeed be solely to blame.
September 14th, 2008 at 3:33 pm
“In a world where firms are barred from competing based on price, they’ll compete based on quality..”
Sure, because as has been observed since the beginning of time, price competition precludes quality differentiation.
Blindingly, abysmally stupid.
September 14th, 2008 at 4:11 pm
The only people who like to travel for business are the unhappily married.
September 14th, 2008 at 4:20 pm
The reason people don’t pay attention to politics is not that they don’t think policy affects them. Instead it is because politicians are disconnected from regular people it certain obvious ways. For most people nonzero sum games dominate their lives and shape their morality. But for politicians their lives are shaped by zero sum games called elections. As a result their moral behavior is alien to regular folks. They vote for people like Bush thinking ‘he is honest’ and ’shares my values’ not realizing how elections twist morality. Other people realize Bush and other politicians are dishonest and decide they don’t want to be engaged in politics.
September 14th, 2008 at 4:26 pm
Once again Matt doesn’t understand the concept of a compensating differential.
Look it up, Matt.
September 14th, 2008 at 5:14 pm
With oil prices being what they are, we seem to be heading towards an equilibrium where nobody can afford to fly, and the service is crappy for those who can.
September 14th, 2008 at 5:21 pm
The most important thing about airline deregulation is that since deregulation, in total, airlines have lost money. But wait, don’t blame deregulation. It’s been pretty well established that in total, all the worlds airlines since the beginning, have lost money. (remember that most of the worlds airlines have been subsidized by government for long periods) Not a penny has ever been made. It’s the worlds worst business.
September 14th, 2008 at 5:22 pm
To see what happens with deregulation of the airline industry, one need look no further than the railroad industry. Not long after deregulation, railroads starting spinning off or abandoning unprofitable lines. Who suffered? The shippers on those lines as well as the decent union jobs lost to low wage non-union regional carriers. The next wave happened as the railroads starting devouring each other. Through a series of mergers and acquisitions, the railroads have been pared down from a multitude of Class “A” railroads to four (5 if you count the Canadian access to the Gulf Coast.) The Surface Transportation Board (STB) mandated competition so now every trunk route can be accessed by two common carriers.
You can see where this is going. Soon there will be a merger between the two major Western railroads with the two major Eastern railroads. And they each will have access to the others major trunk lines in the STB’s Two for One principle of keeping it competitive.
It has become a Pepsi v Coke world, Pepsi owns half the market and Coke owns the other half. Soon we will have two railroads, two pharmaceuticals, two banks, two of every industry ad infinitum and the government will declare that because there are two, it is competitive.
Which brings us to the airlines. Two national airline carriers with lots of marginally profitable regional carriers. And thus free market capitalism shall triumph.
September 14th, 2008 at 5:39 pm
It seems that that tradeoff has been good for tourists and people traveling to visit family because, evidently, that’s what consumers would prefer. But it’s been a disaster for business travelers since cheaper flights are worthless if you’re not paying for them, and crappy service is crappy.
Two things. One, there’s this ludicrous false dichotomy between tourists and people visiting family on the one hand and people getting comped by their employers to fly places on the other. There are also self-employed people who have to fly places on business and pay their own fare, kids flying to and from college, and all sorts of other things. More importantly (and secondly), though, is that individuals aren’t the only ones with interests; businesses have interests too. From your perspective, the Atlantic, or CAP, pays for your flights, so why should you care what they cost. But from the perspective of the big employer who’s saving millions a year on cheaper flights for all the employees it has to pay airfare for, deregulation was a boon.
September 14th, 2008 at 5:43 pm
Many years ago and (I think) after one of the major price wars following airline deregulation in the US, I read a very interesting article in Fortune magazine. The author made a very interesting argument that there were certain industries where normal market principles could not create any kind of stable equilibrium.
Those markets had two key characteristics:
1) High barrier to entry (huge initial investment required to start business was the most common one, but there were a couple of others that I can’t remember now).
2) Very low incremental cost for production units once you had made it past the startup barrier. (This was actually the key in conjuction with the high barrier.)
The assertion in the article was that in these industries, the natural state was either collusion or intermittent and ruinous price wars.
Once you have made it past the entry barrier in the airline industry, your major cost involves taking off and landing a plane (fuel, crew, take-off and landing slots, maintenance, etc.). Once you have got enough passengers on the plane to “cover the nut”, each additional passenger is solid profit.
A small fare decrease that improves the fill rate of your planes can pay huge dividends – until the other airlines copy you. Then everybody loses till they come to their senses and raise fares again. Then you make some profits till the next time someone gets tempted to increase fill rates by cutting fares. Lather, rinse, repeat…
I’m no longer a subscriber to Fortune – anybody remember this article and has access to archives on line?
September 14th, 2008 at 5:45 pm
Clearly, dereg has been a disaster for airline investors. It’s also been a disaster for airline employees, who have seen their real incomes fall over the last thirty years. I’ll also continue to argue it’s been on balance bad for business travelers. Last minute no Saturday stay fares are higher than the standard fares under regulation, and virtually every flight is full these days (versus maybe 60% full in the old days). Yeah, if you’re an over 75,000 or 100 k mile flyer you probably can find your way into first, but that’s probably not gonna happen for the ordinary 25-50k business flyer, so you’re probably stuck in back with Ma and Pa Kettle, and the legroom back there is way worse than under regulation.
The clear winners have been Ma and Pa Kettle, who have the opportunity to travel more often than previously.
And yes, the low-fare low-quality strategy has proven to be the most profitable strategy under dereg. American tried a few years ago to add legroom, gambling that passengers would be willing to pay up enough to pay for the lower capacity on each flight. They guessed wrong. Ma and Pa (and lots of companies who require their travelers to take the lowest fare) will bail for $10 regardless of comfort or any other aspect of service quality, so AA had to add back the seats and reduce the legroom.
I’ll argue that one influence on flight attendants was application of age discrimination statutes against the airlines. Once upon a time, airlines forces out their FA’s once they reached a certain age. Some foreign airlines (e.g., Singapore, which has traded most on the image of its FA’s) still do force them out once they’re no longer hotties. In the U.S., you can’t do that, so we have a large number of FA’s who are, well, mature. Sometimes this can be good, because they’ve seen it all before and they can be calm and professional under almost every circumstance. Other times it’s not so good, and you have an FA who knows he or she can’t be fired, snaps at the customers, and gives the bare minimum service required.
September 14th, 2008 at 6:02 pm
It seems that that tradeoff has been good for tourists and people traveling to visit family because, evidently, that’s what consumers would prefer. But it’s been a disaster for business travelers since cheaper flights are worthless if you’re not paying for them, and crappy service is crappy.
I always wonder what “service quality” in this context is supposed to mean, exactly. True, free meals (of dubious quality), free alcoholic beverages and hot towels have mostly disappeared from coach. But coach caters mainly to leisure travelers rather than business travelers, and the loss of those meager comforts has been more than offset by a reduction in ticket prices.
Let’s review some of the ways in which air travel has improved since deregulation: Fares are much lower (for both business and coach service). There are many more choices of flight schedules, routes and carriers. Planes are safer, quieter, more reliable, more comfortable, and have much better entertainment services. The internet allows travelers to research fares, schedules and carriers, buy tickets, select seats, and check-in for flights online. Seats and amenities in business and first class have improved significantly. The horizontal lie-flat seat, which effectively turns into a bed and makes it much easier to sleep, is rapidly becoming standard in business class on long-haul international flights, providing a level of comfort superior to that of even first class just a couple of decades ago. And first class is also better than ever. Emirates now even has a “super first” class on their new A380s, where passengers effectively have their own separate suite. And all first class passengers on their A380s can take a shower during the flight.
True, security procedures have become more burdensome. But I think the magnitude of that change is frequently exaggerated. And it doesn’t have much to do with deregulation. X-ray screening was introduced in response to hijackings that predated deregulation. The average risk and duration of flight delays or cancellations might be greater now than they were before deregulation, due to the huge increase in passenger volume, although I haven’t seen any clear evidence on that.
September 14th, 2008 at 6:15 pm
1) High barrier to entry (huge initial investment required to start business was the most common one, but there were a couple of others that I can’t remember now).
Starting an airline does not require a huge initial investment. You can start with just a few leased aircraft and grow from there. Hence the explosion of new carriers in countries where air travel is deregulated. Southwest Airlines started with just three planes. Now it has something like 500 and is the largest airline in the world by passenger volume.
September 14th, 2008 at 6:34 pm
Starting an airline does not require a huge initial investment. You can start with just a few leased aircraft and grow from there.
While that might be possible and certainly was the case with SWA 40 years ago (about 500k in startup money), that’s not the norm today.
For example:
JetBlue: 130.2 million in startup money (http://www.answers.com/topic/jetblue-airways-corporation)
SkyBus: 160 million in startup money
(http://blogs.usatoday.com/sky/2007/04/skybus_called_m.html)
Virgin America: 177.3 million in startup money
(http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2005/12/19/story7.html)
Compared to most businesses, that’s a high barrier to entry.
September 14th, 2008 at 6:36 pm
In a world where firms are barred from competing based on price, they’ll compete based on quality.
Accepting this argument as true, deregulation was good for the poor, and bad for the rich. Which of these groups do you wish to benefit?
(And note that many of the abolished regulations discouraged any form of competition – even the kinds that benefitted wealthy businessmen.)
September 14th, 2008 at 6:40 pm
It’s been good for business, because less expensive travel means more facetime with clients. This is Matt again having no idea what he’s on about, because he lives in a bubble universe of theory. I travel for a living, and I’d be able to do a lot less of it in a regulated environment.
Heck, I can apply the same logic to bloggers like Matt and newspaper and magazine writers. Should Matt step aside to make their lives easier?
September 14th, 2008 at 6:58 pm
#8 Kafka
I don’t think Matt is saying what you think he’s saying.
# 21 James Robertson:
There’s a difference between what’s good for business and what’s good for employees, in this case employees travelling on behalf of their employer.
September 14th, 2008 at 7:05 pm
Your first paragraph here made me think of E.J. Dionne’s classic book “Why Americans Hate Politics.” Some things remain constant over the years.
September 14th, 2008 at 7:22 pm
@Don K.
The problem with the FA is that unlike pilots, FAA does not set a mandatory retirement age. And the annual evacuation drill test FAs are required to pass is not tight enough to weed out FAs that’s unfit for service.
Being a former United 1k flyer, I had heard a lot of jump seat gossip about the legendary Iris Peterson, and they are not very flattering.
http://en.wikipedia.org/wiki/Iris_Peterson
It’s one thing go say that they should be forced out once they are married or over the age of 30. Or one Asian airline have a policy of only issue uniform to FA in the size they are hired in, so once they can no longer fit, it’s time to leave. But I really think FAA should have tougher flight physicals to weed out FAs that may be danger to themselves or others.
September 14th, 2008 at 7:47 pm
I have to agree with a number of other posters, that this entry is nonsense. Most of your posts are well thought out and reasoned, Matt, but this one has little basis in reality.
“In a world where firms are barred from competing based on price, they’ll compete based on quality.”
Says who? Why can’t they compete on both, as most products do? You can buy a cheap car or an amazingly luxurious car and anything else in between. It’s great that there are cheap, no frills flights. Why can’t there be more expensive flights with better service too?
Virgin America is competing on price, but it’s attempting to off a unique experience as well. Jet Blue introduced TVs in each leather seat and yet is still competing on price.
We don’t even have deregulation in this country. Just less regulation. International airlines are not allowed to compete for domestic routes. There are some great airlines out there that would love to compete with our domestic carriers.
Besides all that, though, I think the question you need to address first is, “why do passengers care so much more about price than anything else?”
Speaking for myself, most flights are really not that bad. What makes air travel terrible is the airports. Security, lines, delays, waiting on the runway, etc. Once you take off, they’re OK. But since the most annoying aspect of flying is something no airlines control, who cares which flight I take? They ALL SUCK because of the airport experience! So I may as well just go for the cheapest direct flight I can find, and that’s what I lean towards.
But there’s one exception. The flight I take the most is San Francisco to New York. Both Virgin and Jet Blue fly out of the international terminal from SFO to JFK. I gladly pay more to get a flight on one of these two airlines specifically because the terminal is much nicer, the secdurity wait is usually non existent, and I enjoy the experience at the airport much more than the cattle call I usually have to suffer.
I put Virgin higher than Jet Blue because they have the same arrangement in NY, whereas Jet Blue has the usual cattle call in NY.
Jet Blue seems to agree with my sentiment that terminal frustration is a key pain point. In designing their new terminal at JFK, they’ve attempted to make the check in and security processes much more efficient and less stressful, and they’ve focused on making the waiting areas more enjoyable.
It’s scheduled to open next month, so we’ll see how it works, but if they make my terminal experience even more enjoyable than they already have compared to their competitors, they’ll get even more of my business than they already do.
September 14th, 2008 at 8:08 pm
#21 James Robertson: I think the assumption is that most business travelers aren’t paying their own way, so their employer’s savings aren’t relevant to them. The correct counterargument is not that low-cost-low-quality isn’t bad for the employees (it is, at least for some of them), but that their interests don’t count, since they’re not paying the bills here.
As for airline shareholders, who gives a damn? Deregulation happened thirty years ago. People had plenty of time to sell their shares if they didn’t like the deregulated market.
September 14th, 2008 at 8:11 pm
Err…. Tim…. if firms are barred from competing on price, then they can’t very well “compete on both” price and quality. That’s kind of, you know, what “barred” means.
September 14th, 2008 at 8:22 pm
The golden age of deregulation was really the 1990s. After the deregulation bankruptcies shook out, you could find a lot of good, cheap deals on flights on a regular basis. Plus, if you weren’t checking bags, you could frequently still make your plane if you showed up at the airport with 10 minutes to spare. Now that fuel is quite expensive, cheap travel isn’t nearly as ubiquitous as it once was. Combined with the post-9/11 security theater, air travel is a big hassle as well as being comparably expensive.
September 14th, 2008 at 8:28 pm
Like that Jewish story about the crowded house and the goat, the very day the TSA checks become less obnoxious, we’ll think the flight experience has improved by leaps & bounds.
September 14th, 2008 at 9:08 pm
So while products generally get better over time…
Not true, actually, or at least that’s not what I learned in archaeology class. The tendancy is for a new technology to be produced at high quality, then for the quality to gradually decline. So, for example, a new style of pottery will be made from high-quality clay and good craftmanship, but over the decades the clay will have more sand and straw incorporated, and the constuction will get more sloppy.
September 14th, 2008 at 9:28 pm
Plus, if you weren’t checking bags, you could frequently still make your plane if you showed up at the airport with 10 minutes to spare.
People who cut things that close deserve whatever they get. They’re the people who cause flights to be delayed when airlines bend the rules to accommodate them (”Hold the plane! I’m running to the gate now. I’ll be there in a couple of minutes.”) A lot of the hassles associated with flying are the result of selfish and thoughtless behavior on the part of a few passengers who screw things up for everyone else.
September 14th, 2008 at 9:30 pm
Re: 19 – Mixner
Leasing has reduced the up front cost of acquiring planes, but I don’t think that was the biggest barrier to entry – the airplane manufacturers would traditionally provide major discounts and financing – particularly in slow markets.
Getting your takeoff and landing slots, flight crew, maintenance & fuel, FAA certifications and insurance, etc. are still pretty big barriers.
September 14th, 2008 at 9:54 pm
Last minute no Saturday stay fares are higher than the standard fares under regulation, and virtually every flight is full these days (versus maybe 60% full in the old days).
If flights now tend to have fewer empty seats than they did “in the old days,” it’s because that’s how people want it (and computerization allows airlines to match supply with demand much more efficiently). Those empty seats aren’t free. Passengers pay for them in the form of higher ticket prices. More empty seats means higher fares. If people were willing to pay higher fares in return for flights with more empty seats, airlines would modify their sales practises accordingly. They could even guarantee that everyone would get an empty seat next to them (on a plane with 3+3 seating, like a 737 or A320, they could do this by selling only window and aisle seats). They wouldn’t even have to do it for the whole plane. They could simply reserve a block of seats for people willing to pay a higher fare in return for a greater chance (or a guarantee) of an empty seat next to them. If airlines aren’t doing this, it is presumably because there’s no market for it. For all the bitching and moaning about the alleged decline in airline “service,” it seems that people don’t really value the services they’ve lost very highly after all. What really matters to them is low fares.
September 14th, 2008 at 10:08 pm
Getting your takeoff and landing slots, flight crew, maintenance & fuel, FAA certifications and insurance, etc. are still pretty big barriers.
No they’re not. Deregulation means airlines can compete for slots. Startup and low-cost carriers more often use smaller and secondary airports to avoid the higher prices and fees of large airports. And operating costs are proportional to the size of the airline. If you start with just a few planes and routes, your initial operating costs will be low. Nor does a new airline need to make large investments in fixed infrastructure. Most of the services involved in running an airline (maintenance, ticket sales, cleaning, etc.) can be outsourced to established companies. The fact that so many airlines have come and gone over the past 30 years demonstrates how easy it is to get into the business, and how easy it is to fail because of the intense competition.
September 14th, 2008 at 10:15 pm
As long as I have a basic level of comfort, and don’t have to make extra stops, I’ve got a strong preference for paying as little as I can get away with.
I’m not in it for the journey; I’m going to spend an hour or three reading a novel, or doing the crossword puzzle in the in-flight magazine. All I want is to get to my destination quickly and cheaply.
September 14th, 2008 at 10:19 pm
Alanc9 said: “Err…. Tim…. if firms are barred from competing on price, then they can’t very well “compete on both” price and quality. That’s kind of, you know, what “barred” means.”
What I meant was, it does not follow that if you allow people to compete on price they will therefore compete on nothing else. There are countless examples, cars being one of them, where price is a major factor in a buying decision, but there are many other factors, and in those products, many manufacturers have found different niches to serve.
Preventing competition in one area in no way encourages competition in others, and that, I believe, is what Matt was saying.
September 15th, 2008 at 6:22 am
It’s not always true that cheap fares go with low wages for flight crew. Ryanair, the biggest European low-cost airline, is reputed to be good to work for, because crew can earn big bonuses: especially for punctuality. The incentive isn’t therefore to be nice to passengers, but to herd them on and off the plane as fast as possible. During the flight, the attendants’ job is to sell as much stuff as possible: food, booze, perfume, lottery cards. Well, what do you expect? Singapore Airlines?
September 15th, 2008 at 8:09 am
the problem with the airlines is that the airliens own so little of the product line. The airlines do not control the parking at the airports, the security, the traffic patterns, they barely control check-in, retail, food, or even the waiting areas. The airlines usually do not fully control luggage handling or luggage claim. Why pay more for a little leg room while the experience is several hours old before every sitting down in the airplane if the experience is equally bad for most traveller before boarding the plane?
Compare hotels to airlines. Few hotels offer roomservice anymore or valets to carry your luggage or four star dining. However, hotel room rates have come down and allowed more people to travel.
September 15th, 2008 at 11:23 am
The real issue about the declining quality of airline travel is how the increasing TSA surveillance and harassment of the general public has made flying an ordeal, while at the same time, a lot of cargo goes into commercial airplanes uninspected, because TSA would rather harass the public and keep them cowed in fear than hire enough competent employees to inspect cargo. The liberty of every air traveler erodes more and more each day, but the possibility of a Pan Am 103-style bomb exploding in the cargo hold of a commercial airplane has not been substantially reduced.
September 15th, 2008 at 8:33 pm
If there only were airlines based on delivering high quality service. Brilliant! If I might suggest calling these proposed operations “charter services”.
Matt, if you can’t swing the nut, your on the airborne bus with the rest of us.
Midwest Airlines targets business travelers and won all kinds of service awards. They’re about to go tits up. There just aren’t enough rides in that market space.
September 29th, 2008 at 11:04 am
A few quick thoughts:
(1) for business travellers, such as me, more travel is not necessarily good news (on an individual level) – but yes, cheaper travel is generally a good news for companies
(2) many more senior colleagues who actually remember “those times” tell me that generally the level of comfort was crap in first/business compared to what it is now (and I can confirm at least partly: seats in “old style biz class” planes are awful) – food apparently also was not necessarily better – so a classical economic evolution: as labour grows more expensive in relative terms, companies save on it and “compensate” on equipment (e.g. seats, entertainment systems), which, relatively, got cheaper
(3) incomplete consolidation means that too many airlines compete, with resulting competitiveness issues
(4) what makes flight miserable are the new security rules
(5) service standards vary hugely between airlines – for some reason they tend to be much higher in major Asian airlines, followed by European, with the US only marginally better than Russian ones…I am not sure this has anything to do with regulation, or deregulation, but certainly with the relative level of attractiveness of jobs in the US vs. other countries, and also the management emphasis on this or that…
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