1978 was an interesting and important year for a number of reasons. The movies Grease and National Lampoon‘s Animal House topped the box office that year. Major albums released that year included Some Girls from the Rolling Stones, Van Halen’s self-titled first album, and Bruce Springsteen’s Darkness on the Edge of Town (of course, I have the original vinyl of all three in my collection).
People in northeast Ohio were feeling the pain of watching yet another New York Yankees World Series championship. This was especially painful for Cleveland fans who noted that the Yankees’ starting roster was filled with former Indians such as Chris Chambliss, Greg Nettles, and Thurman Munson, whom the team lost in free agency to the much higher-paying New York franchise. We thought it was unfair, and that there should be something done to break up the monopoly.
It is also important to remember that 45 years ago the US government started the process of deregulating the domestic commercial airline industry. For those of you too young to recall, the Civil Aeronautics Board (CAB), created routes, schedules, and set airfares for people flying in the United States. This resulted in high prices and limited competition. For most American families, the cost was prohibitive, and only wealthy people could afford to fly.
I thought this was an important topic to remind people of, especially given the challenges the airline industry has faced in a post-Covid world. We saw this exacerbated during the holiday season with multiple delays and cancellations, which resulted in people being stranded across the country and not being able to reach their friends and loved ones.
However, most of the change in the airline industry over the last 45 years has been positive. The chart below shows that the average cost for a US airline flight has fallen by approximately one-half, when adjusted for inflation over that time. This has allowed many millions more people to be able to travel by commercial air than ever before.
Deregulation allowed airlines to compete freely in the marketplace. In turn, this has increased competition and led to lower prices for consumers. It also increased the number of low-cost carriers and additional destinations for consumers to choose from. We know that this has been additive to jobs, economic growth, and the tourism industry.
Many northeast Ohioans still harbor ill will towards the New York Yankees dynasty. We rightfully feel that the lack of competition allowed this financial Goliath to treat the Cleveland Indians teams of the 70s and 80s as their personal farm system.
However, airline deregulation has largely been a success for consumers and the US economy at large. As with most things in a free market economy, increased competition, lower prices, and more flight options have been driven by entrepreneurial innovation. This has led to the overall growth of the industry and to the US economy.
We like to share these brief history lessons that are generally long forgotten. This helps us appreciate and not take for granted the life we live and the benefits we get from the American economy today. We feel it is important to remember and understand as we continue “Moving Life Forward”.
© 2023 Jesse Hurst
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