Consumer Views of the Need for Government Intervention in the Airline Market

Inflamed public opinion--sparked by an accident or scandal and fanned by media coverage--frequently stimulates enactment of consumer policies (Mayer 1991). The deregulation of the airline industry in the United States is an exception to this pattern, however. Rather than coming in reaction to public outcry, airline deregulation was a response to the prolonged efforts of "a very unusual set of actors in the public arena: economists, political scientists, legal scholars, and similar purveyors of ideas" (Weidenbaum 1987). Given the public's limited role in putting airline deregulation on the policy agenda, it is perhaps not surprising that evaluations of airline deregulation have also typically failed to factor in public opinion. Instead, these evaluations have been conducted in terms of the quantifiable objective variables that experts handle best--like market concentration ratios, fares, and accident rates. Even if these expert assessments were in agreement about the need for renewed government intervention in this market, analyses of public opinion can still make an important contribution to the current policy debate regarding the airline industry. Airline deregulation was promoted on the basis of its alleged benefits to consumers. As such, consumers' current perceptions of the success or failure of airline deregulation should play an important role in any reregulation debate. Yet, knowledge about the public's views of airline deregulation is shallow, relying exclusively on univariate or bivariate analyses of a few questions contained in national opinion polls. In this exploratory study, consumers' opinions regarding the need for renewed government intervention in the airline industry are presented and analyzed. Particular attention is given to how respondent characteristics as well as aspects of the local airline market (i.e., airport concentration level and the extent of direct flight service) influence consumers' opinions. More broadly, the study aims to make public opinion a more important input to the current debate about the future of airline deregulation. LITERATURE REVIEW For the most part, economic studies of airline deregulation have examined its objective costs and benefits and attempted to identify changes in the price and quality of service attributable to deregulation. In contrast, public opinion studies have focused on consumers' perceptions of the costs and benefits associated with airline deregulation. Because the results from the two types of studies are presumably related, both should be reviewed before undertaking an in-depth study of public opinion. The economic studies are reviewed first, followed by the less numerous public opinion studies. Economic Studies The Airline Deregulation Act of 1978 precipitated the phased withdrawal of U.S. government regulation so that, by 1983, airlines were free to decide which routes to serve and what prices to charge. Early economic studies that appeared in the mid-1980s generally concluded that airline deregulation was working well. That is, it had increased competition and improved consumer welfare (Bailey, Graham, and Kaplan 1986; Moore 1986; Morrison and Winston 1986; Trapani and Olson 1982). Even as the 1980s came to a close, studies continued to appear documenting the net benefits of airline deregulation. A Federal Trade Commission study found that average prices fell, although mostly on long distance routes and in large city markets (Ogur, Wagner, and Vita 1988). A study by the U.S. Department of Transportation (1990a) also reported that travelers had benefited from deregulation by receiving more service at a lower cost. The Air Transportation Association (1989) concluded that the degree of competition in the airline industry had increased substantially since airline deregulation had begun. Surveying the evidence, Alfred Kahn (1990), the architect of airline deregulation, affirmed the continued success of deregulation despite the U. …