Reregulation, Diversificantion and Cooperation

When the Carter Administration in the late seventies disbanded the Civil Aviation Board as part of a deregulation drive across the US economy, one of the major impacts has been a fluctuation of fortunes for the aviation industry.

Given the high price of jet fuel and its own uncertain fluctuations and particularly the present credit and financial crises the aviation industry will be faced with far greater regulation than it is accustomed to. This will be particularly so if the industry is going to be supported by tax payer supported loans.

One of the regulations that I believe should be instituted is the interconnection regulation. The federal government should demand that airlines that open new air services or cut old ones consider how the change of service connects with the ground transportation services available in a particular area. This would lead to a greater integration of both air and surface transportation, thus improving transportation for both people and freight. Did DHL engage in such considerations when it closed down its international operations in Ohio?

While the federal government will engage in revamping aviation to make the transportation system more efficient, the aviation industry can start thinking in terms of being a transportation provider rather than only be involved in air transportation. Thus, it may start thinking of diversifying its operations and become investors in high-speed or regular rail companies, efficient coach networks, etc., particularly since the latter will increase in importance with the debacle of the US car manufacturing sector. So rather than competing among one another and with other modes of transportation, cooperating together and with present and emerging new transportation companies would contribute more to a better financial (social and ecological) bottom line than operating in a competitive attitude at home and abroad.

The demands of the climate crisis where the aviation industry will be included in the cap-and-trade system to reach 80% or even 90% reduction in GHG emissions is an additional reason to cooperate with an Obama Administration and the other actors in the emerging economic landscape where the private sector will be given the opportunity for productive creativity within limits decided upon in a highly participatory fashion.