Will the CAB return?

There has been some talk around aviation circles that we may see a return to regulated airlines.  The attitudes on this are as varied as any other political or economic topic.  Although the airlines would enjoy a certain stability that does not currently exist I am given to wonder if the re-establishment of governmental controls would be yet another intrusion into free markets.  Many pilots and airline managers alike  have dreams of returning to the grand old days of guarenteed jobs and taxpayer underwritten routes. This ofcourse assumes that the old style of regulation comes back.  I am pretty sure these are pipe dreams.

So what would the new regulated system look like? Who would control it? Where would the money come from? What barriers would it create to new entrants and the free market system?  Answer: Nobody knows, so let's just make a truckload of assumptions and paint a pretty picture of a re-regulated airline industry.

The New Civil Aeronautic Board (CAB)

Manned by political appointees, the make-up of this board will depend largely on who is in office at the time so I will go with the current administration.  There will be a nine member panel made up of three lawyers,  a Keynesian economist, an environmetalist, a former senator and three college professors.  They will capitulate to the whims of senators who are backed by major airlines.  They will use route assignments and slot controls to manipulate traffic patterns in accordance with said influences.  Small towns like Albany and Tallahassee will get big jets and commuter aircraft will serve airports that 'need' service even if they do not merit it.

OR

There may not be a new CAB but an airline Czar.  He can pretty much do as he or she pleases.  Step one would be to freeze all routes and study how well each airline is doing it's job.  Underperformers will lose routes and good performers will get more.  The Airlines will be given 'zones of influence' which are in reality price fixed psuedo monopolies. (Isn't this fun?). When an airline does a good job it can petition to assume more routes.  Uncovered routes (read unwanted and unprofitable) will be the only thing given to new entrants (in the unlikely case there are any).

There is also the soft approach.  Airlines will have minimum prices to prevent fare wares and maximum prices to prevent gouging (caps and collars). New routes will be government approved and based on political need. Over capacity will not be a problem as, like Islamic Terrorist, it will be removed from the official government vernacular . The new phrase will be 'market enrichment'.  Essential Air Service contracts, now called route balancing, will be dangled in front of carriers as guarenteed money to serve losing markets (now called fiscally retrograded markets). Routes will be awarded based in no small part on what aircraft type the carrier plans to use.  A 757 will get preference over a much smaller DC-9. But this will be offered as incentive, not as a mandate.  It is a softer glove over the iron fist of government. Mergers will be allowed only if the DOJ and the Office of the Airline Czar see it will make congress happy.

This will insure the stability of the airlines even if the route structure looks like some gerrymandered political district. There is one teensy little fly in the oinment.  If the government ever actually gets called on its debt it will have to let go of its subsidies and the airlines will be back to square one wondering how to make a profit in the real world. The resulting strikes, layoffs, bankruptcies and mergers will at least give residents near the airport a pleasant break from the constant noise of airplanes coming and going.