Transportation Policy

Alfred Kahn, the Father of Airline Deregulation, RIP

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Alfred Kahn, the economist whose ideas and advocacy led to the deregulation of airline ticket prices in the 1970s, has died at the age of 93. Aviation Week sums up his immense contribution to a massively freer market in transportation:

Kahn was a vocal opponent to government control of industry, and in 1971, while a professor at Cornell University, published "The Economics of Regulation," a two-volume work that included a call to deregulate U.S. aviation.

That book, and his relaxation of local government control of electric, gas, telephone and water companies during his tenure in the mid-1970s as chair of the New York Public Service Commission, led to his appointment in 1977 as chairman of the CAB, and a mandate from President Jimmy Carter to overhaul the country's airline industry.

Kahn was cherished at Reason throughout his career. Early editor and Reason Foundation founder Bob Poole shared Kahn's understanding and passion that market forces would do a far better job at making air travel and other goods and services better and more available to people. In a world in which air travel is commonplace (and during a week when tens of thousands of travelers are stranded by snowstorms), it's hard to remember that prior to deregulation, planes were basically only for the wealthy.

There's a 1988 Reason interview with Kahn which isn't online and there's this 2004 Soundbite with him conducted by Julian Sanchez. Here's a snippet:

[Kahn:] The benefit of deregulation has been the direct savings to consumers. Airline consumers have saved over $20 billion per year, which has brought air travel within reach of people of modest means…. 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…. Monopoly profits can be earned not just by companies but by workers—not so much the flight attendants but the mechanics and pilots. I've heard a pilot express regret that I had recovered from a recent car accident!

Q: Do we need regulation to prevent network infrastructure owners from controlling online content?

A: I'm sympathetic to the argument that control over access to the Internet might be abused. But we've got a severe dilemma: The industry is confronting costs of tens of billions per year in infrastructure deployment. The introduction of regulations requiring them from the outset to make their facilities available to competitors at ridiculous rates threatens to kill the goose that is laying the golden egg. And you've got real competition between DSL and cable. It seems to me that government should be very cautious about entering markets where so much innovation is going on.

In December 2003, Reason named Kahn one of our "35 Heroes of Freedom" who helped "make the world groovier and groovier since 1968," the year of Reason's launch. Here's his entry, which comes alphabetically between Jane Jacobs and Rose Wilder Lane:

As head of the defunct Civil Aeronautics Board during the Carter years, "the architect of deregulation" pushed for free markets in the airline industry, ushering in an age in which virtually every slob in America could afford to fly and providing an unassailable example of markets delivering better prices and greater safety than government regulation. Snobs sniff that Kahn turned once-classy airlines into buses in the sky, which is just one more reason to praise him.

I sent him a copy of that issue (our 35th anniversary!) with the list in it. Because we listed our heroes alphabetically, Attorney General John Ashcroft was at the top of the list (we tipped our hat to him ironically, since his actions had managed "to create an unprecedented coalition of conservatives, liberals, and libertarians around a single noble cause: the protection of civil liberties.") Kahn saw the Ashcroft name and before reading through the entry, wrote an angry note to me saying that he didn't want to be on any list with that guy. Later, after he'd read through the section, he sent another email, sheepishly retracting his earlier note and saying that we was thankful to be included in such a list.

We're the ones who are thankful, Prof. Kahn. You made the world a better, freer place by combining powerful ideas with civil discourse and political action. You gave us some great policies, but your real contribution might have been showing that it's possible to change the status quo through argument and persuasion rather than force and double-dealing.

Reason.com citations of Kahn. We send our condolences to his family, friends, and colleagues.

Here's a Reason.tv documentary featuring Bob Poole that advocates finishing the work that Kahn started by changing the air-traffic control system. About 7.30 minutes. Go here for more information.

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  1. Don’t say he died. Just say he went bananas.

  2. Kahn was cherished at Reason throughout his career.

    Shoulda cherished him enough to photoshop out that tie.

    1. That tie, I’ll have you know, is a fully functional piano.

  3. KAAAAAAAAAAAHN!

    1. THIS IS CETI ALPHA FIVE!!!

    2. There is simply no way his students didn’t greet him, en masse, in their best impersonations of the Shat yelling that epic word. Every class.

      He’d protest that he was Kahn, not Khan, but the kids would look knowingly at each other and nod their heads.

  4. it’s hard to remember that prior to deregulation, planes were basically only for the wealthy

    Now planes are for the lowest scum. OK, not quite the lowest. They use buses. I remember the Richy Rich days of flying. Engines falling off, spectacular crashes, but at least you could get a meal and a pillow. And the stewardesses were hot women, not bitchy men. But at least now we have the TSA. Thanks, deregulation!

    1. Yes, deregulation, thank you for the TS.. what?

  5. A few weeks ago there was a barely noticed report that the FAA records are in such a mess that they do not have registration information on about a third of the private planes in use. The head guy said he was going to crack down and remedy the ‘problem’. Okay, your agency really doesn’t function, yet disasters remain rare? What am I missing here, bureauRat? Your need for employment and a gravy pension plan, or your need for a purpose in life?

    1. They have a terrorist-repelling rock.

  6. I hate to admit it, but I had no idea Kahn was still alive. One of my more excellent economics professors spent a lot of time talking about what an amazing feat it was to actually deregulate (decartelize, anyway) the airlines.

    1. That’s the thing…I was sure he’d died about a decade ago. I had him mixed up with that other guy who really did die, or maybe the other other one.

  7. I long for the days when air hostesses, or stewardesses, were healthy, single, and between ages 21 and 28. They were also attentive and attractive. Now flying from London to Dallas the flight attendants are greying senior citizens who spend most of the flight avoiding passengers in the galley.

    Flying was a lot more fun back before deregulation: No long lines, no intrusive searches, no ID checks, passable food and snacks, free drinks, free playing cards, magazines and newspapers, pillows, and blankets. Now air travel is just a pain in the ass. I don’t miss the astronomical fares for air travel in the old days, but rising taxes and fuel costs are pushing prices up constantly. Really my complaints are about bad re-regulation.

    1. No, your complaints are about other people.

      This country is addicted to price competition. People will accept almost any decrease in quality for a decrease in price. Thus, when deregulation happened, airlines started catering to what their consumers wanted – dirt cheap fares. There’s no way to pay for quality in that scenario, so this is what we get. Now, with fixed prices, the airlines bankrupted themselves competing on quality. I’m sure those were the days, but, well, the market just doesn’t care. More consumers want low prices than want a tolerable flight.

    2. You are off-topic CatoTheElder, but I used to get an aisle seat especially on Continental because they “moved their tail for me.”

  8. I think Kahn also deregulated trucking. I was working at a printing paper manufacturer at the time and I recall how irritable were the two guys in charge of getting our product delivered. I’m sure their lives were greatly improved. Or they may have remained grouchy? We’ve lost contact.

  9. That’s too bad, but he lived a long life. I wrote a paper in college about airline deregulation. I cited him quite a bit. RIP

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