Wednesday, December 9, 2009

Turbulent Times at an End?

A report from yesterday's Wall Street Journal indicates that the U.S. airline industry may soon recover from its financial woes.  See Susan Carey & Mike Esterl, Airline Appear Headed for Recovery, Wall St. J., Dec. 8, 2009 (available here).  While the story notes a number of challenges ahead, including consumer concerns over the spread of the H1N1 virus and potential increases in fuel prices sparked by overall economic recovery, the bottom line is that the U.S. aviation sector has taken the right steps to weather the current economic storm and reposition itself for profitability in the near future.

Assuming the airlines' recovery remains steady over the next several years, one has to wonder whether it will be enough to halt recent discussions about reregulating the industry.  Transportation Secretary Ray LaHood has committed himself to establishing a new advisory group for aviation, one which could certainly suggest lawmakers take a more proactive role in "stabilizing" or "maintaining" U.S. air transportation.  At the same time, it's important to bear in mind that despite numerous upheavals over the past three decades, the airline industry has done remarkably well staving off reregulation.  (Ironically, however, this may have been due to the industry's fractured interests where no "one size fits all" regulatory schema would be appropriate rather than an exercise of bald lobbying power.)  Cf. Michael E. Levine, Why Weren't the Airline Reregulated?, 23 Yale J. on Reg. 269 (2006).

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