Wednesday, August 26, 2009

Kennedy and Airline Deregulation

With the news of Sen. Edward Kennedy's passing, it seems appropriate for the Aviation Law Blog to make mention of his considerable contribution to U.S. airline deregulation.  As head of the Subcommittee on Administrative Practice and Procedure of the Senate Committee on the Judiciary, he held widely publicized hearings in 1976 to consider arguments on airline deregulation.  See Report of the Subcomm. on Administrative Practices and Procedure of the Senate Committee on the Judiciary, 94th Cong., 1st Sess. (1975).  The so-called "Kennedy Report" concluded:

The airline industry is potentially highly competitive, but the Civil Aeronautic Board's system of regulation discourages the airlines from competing in price and virtually forecloses new firms from entering the industry.  The result is high fares and security for existing firms.  But the result does not mean high profits.  Instead the airlines--prevented from competing in price--simply channeled their competitive energies toward costlier service: more flights, more planes, more frills. . . .  The remedy is for the [CAB] to allow both new and existing firms greater freedom to lower fares and . . . to obtain new routes.

Id. at 3.

A summary of the report can be found in the archives of the Journal of Air Law and CommerceSee Edward M. Kennedy, Airline Regulation by the Civil Aeronautics Board, 41 J. Air L. & Com. 607 (1975).

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