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.