Thursday, October 05, 2017

The Civil Aeronautics Board: Regulating Sandwich Sizes and Raising Prices

"In 1938, the federal government's Civil Aeronautics Board (CAB) began regulating prices, routes, administration of new airlines, and just about every other aspect of the airline industry.  For the next forty years, the CAB administered a monopolistic cartel that benefited corporate airlines rather than consumers.

"The CAB severely restricted competition in the domestic airline industry by allowing no new airlines after 1938 when there were sixteen airline companies operating in the United States.  Several airlines became defunct, so that by 1978, there were only ten remaining, operating under a monopolistic route-sharing scheme. Because airlines could not compete on prices or on routes, both of which were set by the CAB, they competed in other ways, such as offering 'free' alcohol and food.  In response, the CAB began regulating the size of sandwiches that could be offered.

"Government-enforced monopolies are very effective tools of corporate welfare.  In 1974, it cost $1,442 to fly from New York to Los Angeles. In 1978, after the industry was deregulated, the same route cost $268.  This is a typical example of how 'regulation in the public interest' isn't."

~ Dr. Thomas DiLorenzo, The Problem With Socialism, (2016), pp, 154-155, Emphasis added

No comments: