The Biden administration has been imposing unprecedented regulatory challenges on airlines for four years now. According to an analysis, Transportation Secretary Pete Buttigieg has nearly tripled the number of transportation-related rules during this time.
Interestingly, there’s no proof that these added regulations have made air travel safer or even reduced delays.
You’d think lessons from the late 1970s—like deregulating airlines and freeing them from government pricing and route control—would be remembered. A notable study by Robert Crandall at the Brookings Institution shows that such reforms have significantly benefited consumers over the last four decades, leading to lower prices and substantial savings.
But there have been failures, too. Buttigieg opposed the merger of Spirit Airlines and JetBlue, which, for many, turned out to be a disastrous decision that pushed Spirit Airlines to bankruptcy and hampered JetBlue’s standing. This has created a less competitive landscape.
Additionally, he attempted to impose limits on the popular Award Mileage programs that save consumers money and reward them with flight perks. He’s also introduced new penalties for airlines on delays, even if those delays are out of their control.
The philosophy from the Biden-Buttigieg team seems to reflect a belief that airlines are exploiting passengers. However, the reality looks quite different. Airline fares continue to remain relatively low amidst rising prices for food, energy, and housing.
In fact, average inflation-adjusted airfares have dropped nearly 20% since before 2019 when ticket prices were already quite high. Airfares actually represent one of the few areas of consumer spending that’s seen a decline when adjusted for inflation. I mean, that hardly seems like a sign of an industry price gouging consumers.
Now, do most politicians really grasp the financial realities at play here? Airlines carry enormous fixed costs, and even during their best years, their profit margins lag behind other sectors.
If United, American, and Delta relied solely on ticket sales, they’d face bankruptcy or have to significantly raise fares or reduce flights.
On a brighter note, the Trump administration, under the direction of Sean Duffy at the Department of Transportation, is charting a different course. They’ve decided against implementing Biden-era proposals that would force airlines to adopt European-style compensation for delays and cancellations and have halted efforts to restrict airline credit card rewards.
One lingering question is how to address flight delays and cancellations. As someone who flies frequently, I can say: I really dislike delays—feels like it’s happening more and more. It’s reasonable to think that there should be some standard compensation for passengers, especially when delays are beyond an airline’s control. Different airlines manage this concern differently.
Instead of adding more government regulations, letting the market find its own solutions might work better. Airlines should clearly communicate their policies regarding delays. Many already provide hotel accommodations for long delays, and if airlines are to be held liable for delays or cancellations, a modest fine or customer compensation could be implemented.
The deregulation of the airline industry in the 1970s has generally been viewed positively, endorsed by economists and consumer groups alike. The current transportation agenda under Secretary Sean Duffy echoes past deregulation efforts, promising improved services and lower costs for American passengers, ultimately leading to a more stable and profitable future for the aviation sector.
