In November, in what history may judge the ultimate triumph of ideology over evidence, the U.S. Department of Justice dropped its lawsuit against the merger of American Airlines and United Airways.
It is altogether fitting that the green light for allowing just 4 airlines to control 85 percent of the domestic market was given by a Democratic administration. For airline deregulation, the precursor for all things deregulatory, was a liberal cause. In 1978 Democrats controlled the White House and both chambers of Congress. Teddy Kennedy, Chair of the Senate Judicial Committee was deregulation’s principal architect. Ralph Nader was one of its most passionate advocates.
The argument they made would not be out of place at a Tea Party meeting today. Industry had captured the Civil Aeronautics Board (CAB), the airlines regulatory agency. As a result fares were much higher than necessary. Continue reading