THE AIRLINE DEREGULATION ACT OF 1978: SAFETY, THE PUBLIC INTEREST, AND POLICY ANALYSIS
by NANCY RUTH ELLIS KUCINSKI, B.B.S., M.P.A.
A DISSERTATION
IN
POLITICAL SCIENCE
Submitted to the Graduate Faculty of Texas Tech University in Partial Fulfillment of the Requirements for the Degree of DOCTOR OF PHILOSOPHY
Approved
Accepted
May, 1990 ACKNOWLEDGMENTS
(^y,^l would like to thank each member of my committee for their steadfast commitment to scholarship and for their unfailing support and encouragement to me throughout my graduate carser. I give a very special thanks to my dissertation advisor, my mentor, and my friend, Dr, Sue
Tolleson Rinehart.
My sincerest appreciation goes to Ms- Donna Barnes for lending me all the resources necessary to complete this study, including opening her home to me. I also thank my family for their unquestionable love and support.
Finally, words can not express the love and appreciation I have for my husband. Dale Kucinski. Without his love and faithful devotion, I would never have been able to complete this study.
XX TABLE OF CONTENTS
ACNOWLEDBMENTS ii LIST OF TABLES vi
LIST OF FIGURES vii
CHAPTER
I . THE PROBLEM AND PROPOSAL FOR STUDY 1
Introduction 1
The Government—Industry Relationship 2 Pre—Phase One: The Beginning of the Relationship 2 Phase One:- Government Hesitations- .- 5 Phase Two 16 Phase Three 23 Cone 1 usion 28
II. PARADOXES, THEORIES, AND ORIGINS 31
The American Democratic Contexts Paradoxes 31
The Broader Policy Perspective 38 Lowi' s Pol icy Types 38 Hayes' Modification of Lowi's Typology 44 A Broader Policy Perspective 49 Regulatory Policy Origin and Process 52 Economic Approaches 53 Social Regulatory Theory 67
Political Processes and Behaviors .70 Legislative Regulatory Processes 72 Regulatory Agency Behavior: Life Cycle Theory 74 Regulatory Reform: Deregulation 79
Summary, Conclusions, and Lingering Questxans.....35
iii 111 - DATA AND METHODS 89
Introduction 89
Hypotheses 91
Methodology: The Triangulated Approach - 93
Case Study Analysis 94 Congressional Hearing Data 97 Case Study Evidence 98 Time Series Analysis 98
Data Col lection 101 Time Frame of Accidents 101 Criteria for Accident Inclusion 102 Causes 104 CAB Activity 108 Air Traffic Control Reports Ill
Conclusion 112
IV. QUANTITATIVE FINDINGS 115
Descriptive Analysis 115
Analysis of Variance 117 Variance Findings of Causes 118 Variance Findings of CAB Activity 122 Variance Findings by Type of Airline 124 Measure of Association 127 Correlations Between Causes and Eras- -.--127 Correlations Between Direct Causes and CAB Activity 129 Conclusion 130
V. CASE STUDY ANALYSIS 145
Introduction 145 Air Traffic Control 146 Congressional Analysis , 154 The Eastern Example 166 Conclusion 170
VI . CONCLUSIONS DRAWN FROM THIS STUDY 175
Introduction 175
iv The Decision Premises of Policy-Makers... 175 The Perspective of Policy Scholars: Economic , Social, or Both? 177 Quantitative Findings 178
Cone lusion 184
REFERENCES 186 LIST OF TABLES
4.1 The Occurrences of Accidents Between 1970 and 1939 134
4.2 Percent of Causes, All Mentions, and Mentioned at Least Once for Each Case 135
4-3 The Relative Proximity to Deregulation of Causes, At Least Once Mentioned, By Eras of CAB Activity 137
4.4 Mean Occurrence of Proximity to Deregulation Groups of Causes, By Eras of CAB Activity 133
4.5 Percentage of CAB Activity, Type of Decision By Eras of CAB Activity 139
4.6 Percentage of Accidents, By Type of Airline, Commuter or Major, By Year 140
4-7 Mean of Accidents for Airline Type, Commuter and Major, By Eras of CAB Activity 141
4.8 Correlation Between Causes Grouped by Proximity to Deregulation With Eras of CAB Activity 142
4-9 Correlation of Each Cause with Eras of CAB Activity 143
4.10 Correlation of Types of Direct Cause Mentioned at Least Once, With numbers of CAB Decisions in Each Type of Decision -. 144
5.1 FAA Air Traffic Control Activity For Traffic Totals and For Air Carriers By Year 172
vx LIST OF FIGURES
T3. 1 Airline Accident Causes By Their Proximity to Deregulation, and the Definition of Each Cause 113 3-2 Definitions of Each CAB Decision Type 114 4.1 The Likelihood of Causes' Relationship to Deregulation, 1979 to 1978, and 1979 to 1987 All Mentions 136
5-1 Air Carrier Passenger Enplanements At Seven Hub Airports, 1969, 1978, and 1987 173 5.2 Air Carrier Departures per Year At Large Hub Airports, 1969, 1978, and 1987 174
vxx CHAPTER I
THE PROBLEM AND PROPOSAL FOR STUDY
Introduction
When Air Florida Airline's Boeing 737 aircraft crashed into the Potomac River on January 13, 1982, Americans were horrified as they watched the drama unfold on the evening news. This tragedy, along with numerous other accidents and near accidents, such as the Aero Mexico crash over Los
Angeles in 1986, and the Continental Airline crash at
Stapleton in 1987, raise several serious questions: how safe is commercial aviation since deregulation? Has deregulation compromised air transportation safety? Does the proper role of government include preserving public safety, and if so, how is that role bounded, and where does it encounter conflict with other elements of public interest? These, and other questions, ^re appropriately raised in an analysis of the regulatory relationship of the government to the airline industry. Such an analysis requires developing three major interrelated frameworks:
1) theoretical understandings of regulatory and deregulatory policy origin and development, 2) the political processes of regulatory and deregulatory policy-making, and 3) the effects on the public of expected and unexpected outcomes of implementing deregulatory policy.
This research seeks to superimpose these interrelated frameworks onto a case study of the Airline Deregulation Act of 1978 in order to illustrate the apparent compromise of air safety as a direct result of government's failure properly to act as public protector-
The Government—Industrv Relationship
The first step in constructing the blocks of the framework is to understand the nature of the arena under investigation: its context, elements, and boundaries. In the case of the airline industry, the boundary between the public sector (government responsibility for regulatory policy) and the private sector (industry operations) has seldom been accurately mapped, mainly because the boundary continually moves, making typical analytical efforts quite difficult- However, it is possible to identify three major phases of regulation through which the airline industry has traveled; 1) an infant air mail industry under unstructured government regulation; 2) a competitive industry, regulated to protect the market; and 3) a non-regulated industry with a completely new competitive environment.
Pre—Phase One: The Beginning of the Relationship Before commencing the analysis of the contemporary deregulated environment, a history of the longstanding public-private relationship is in order. It is vitally important to this analysis that careful consideration be paid to nhe historical development of the inaustry-
government relationship. There are specific strains with:Ln
this history that emphasize design flaws in government
policy through the first two phases of development, and
perhaps in the third phase as well. They include
misunderstanding of the unique complexity of the airline
industry and an inconsistent government regulatory approach,
both of which produce design flaws- Finally, the cumbersome
and overlapping organizational structure of agencies related
to aviation has also proved problematic.
These strains may provide a telling commentary on the
government's historical failure adequately to deal with the
technological, economic, and safety needs of certain
"special" industries, chiefly the airline industry. The
airline industry can be thought of as a natural monopoly
and, like other natural monopolies, it might appear to be
inhospitable to competition. It differs significantly from
other natural monopolies, however. From the beginning,
government activities, and not the inherent nature of the
industry itself, determined its lack of competitiveness.
From the outset, the airline industry, needed government subsidy to protect and nurture its infancy. But
legislative attempts to rationalize the industry were permeated with conflicting goals as the industry began to take on an apparent competitive shape- Similarly, governmental supervision of safety, licensing of crews and, aii'craft, and the building of national airways had two important effects on the "specialness" of the airline industry. First, according to Thayer (1965: 8) "the federal licensing and inspections made it inevitable that the basic operational elements of all airlines would be virtually identical, thus giving passengers few reasons for choosing one airline over another." And second, the national airways along with radio-navigation equipment and weather forecasting facilities were essentially indications of the permanency of an air carrier system as a service to the public.
It was not until the mid-1920s that government involvement in the airline industry came to be considered appropriate or necessary. When the appropriateness of a public—private relationship became apparent, new problems emerged. Questions were raised concerning the level at which the government should be involved, and if that involvement should include government financial subsidy of the industry. There are also two essential elements which were intertwined with the questions of government involvement- First, are the roles that the Departments of
War and Navy played in the development of aircraft and air routes for military usage- And second, the early role that military pilots and planes played in the delivery of airmail prior to the Air Mail Act of 1938. Soon after Orville Wright made the first airplane flight on December 17, 1903, European nations were quickly developing the possibilities of aircraft for military uses.
By the time World War I began, the development of aircraft in Europe was well underway leaving the United States far behind- On March 3, 1915, President Woodrow Wilson approved legislation which established the National Advisory
Committee for Aeronautics (38 Stat. 930, 1915). The committee was charged with supervising, directing, and conducting research in aeronautics. The information produced from the Committee's research had a profound influence on the progress of aeronautics by improving performance, efficiency, and safety (Rhyne, 1939: 17).
Phase One: Government Hesitations
The early pioneers in aviation perhaps envisioned not only the adventure of flying, but also the economic and cofflfnercial potential of the new technology of aviation which included the benefits of an air mail system, but passenger air transportation system as well. Some of these early pioneers of the industry included Herbert Hoover, then
Secretary of Commerce, philanthropist Daniel Guggenheim, and aircraft manufacturers William Boeing and Frederick
Rentschler of Pratt and Whitney (Davies, 1972). However during these early years, the new technology of aviation was, in the United States, used primarily for hauling freight not passengers. Several things contributed to the limited use of aviation during these early years: the
©•fficiency and luxury of the passenger trains, the comparatively slow speed of the aircraft of the 1920s, and the concentrated effort of the postal service in expanding air mail delivery.
These orientations spilled over into the policy making process. The first major piece of legislation directed toward regulation of civil aviation was the
Contract Air Mail Act of 1925, also known as the Kelly Act
(43 Stat- 805, 1925). Under the Kelly Act the Postmaster
General was authorized to award airmail contracts to private airlines. The Kelly Act essentially changed the nature of the government—industry relationship by transferring air mail service to private operators under a scheme of competitive bidding- Two of the first companies to win competitively bid air mail routes were Boeing Air Transport and National Air Transport (Davies, 1972)- William Boeing of Boeing Air Transport continued to be instrumental in promoting the industry by building better aircraft and engines.
The development of a national airline system was severely limited by the clear political atmosphere within
Congress against granting financial subsidies to industry-
All in all, the public-private relationship was off to a poor start with the Kelly Act, and the immediate amendments to Kelly did not provide much relief because of the difficulty in drafting suitable legislation which did not give the appearance of a subsidy- The political facts surrounding the early pieces of legislation hindered the effectiveness of the Kelly Act to advance not only air mail, but a passenger system as well. Similarly, Congress was hesitant to approve much more than a modest compensation scheme. Under the Kelly Act, air mail carriers were compensated by the government for no more than 80X of the revenue generated from the sale of air mail postage (Kane and Vose, 1977). This, plus the fact that the Postmaster
General held complete authority in rulemaking did not encourage many potential air mail contractors to rush to the bidding scene. It became immediately apparent that such compensation was not adequate, so Congress passed an amendment to change payment to a poundage system based on the weight of the mail to be carried (44 Stat- 692, 1926).
However, the poundage system was inequitable to companies carrying air mail over long distances. Although the company expenditures of long haul carriers were higher than short haul, all companies were compensated based only on the weight of air mail carried- Since this produced very little incentive to maintain longer routes. Congress again passed an amendment to the Kelly Act, the Waters Act, in 1930 (46
Stat. 259, 1930). Waters was designed to provide incentives for the more established carriers to fly longer routes by awarding air mail route certificates for 10 years
instead of contracts, in an effort to create more stability
in the industry. The Waters Act also changed the compensation system to a per mile payment rate, but the Act
carried a *1.25 limit which also proved to be inadequate as
an incentive for developing longer routes. Similarly,
without adequate airline compensation, it was quite
difficult for companies to develop passenger air travel
service systems.
Along with legislative activity aimed to bandage the
wounds of the Kelly Act, other attempts were made to
rationalize not only the economic aspects of the airline
industry but also a developing federal airways system. In
1926 President Coolidge signed the Air Commerce Act of 1926
(44 Stat. 853). Under this Act, the responsibility for
regulating aviation was placed in the Department of
Commerce, where the Secretary of Commerce was instructed to foster air commerce; designate and establish federal airways, establish, operate, and maintain aids for air navigation (except airports); arrange for research and development to improve such aids; license pilots and other airmen; issue airworthiness certificates for aircraft and major aircraft components; and investigate accidents- (44 Stat. 853)
The Aeronautics Branch of the Department of Commerce
continued to perform all the duties necessary for maintaining an aviation system except that of awarding air mail contracts which, until 1934, remained the function of the Postmaster—General- The duty of regulating the safety
3 cf ^ir CArrxer operations and the duty to develop a sound economic base for an infant industry were, from the beginning of phase one, seen as two separate legislative and administrative functions, giving birth to a legacy of duality which remained through phases two and three.
The floundering legislative attempts to systematize the air csirrLer industry did little to promote passenger air travel. However, Davies (1972: 46) suggests that
"Charles Lindbergh's achievement probably produced greater mass enthusiasm than any other event in the history of air transport—or, indeed, the history of aeronautics-" The public saw Lindbergh's successes in the air, as well as the safety aspects of flying. Airline passenger travel was made quite popular in Europe, and many wealthy Americans pursued air transportation for its novelty. The inability of
Congress to produce legislation bent towards promoting passenger travel became inconsistent with the public's growing demands for and curiosity about air travel- Such inconsistency continued until President Hoover was virtually forced by two major events to pursue a more rationalized airline system-
The first event which led the Hoover administration to take a more active role in airline regulation, was the breakdown in rate negotiation between the Post Office and the air mail route certified carriers; the conflict was primarily over how much the government would reimburse carriers for possible losses on passenger service should they prove to be unprofitable (Thayer, 1965).
The second factor, was the transformation in the policy approach of the Hoover administration initiated by the newly appointed Postmaster General Folger Brown- Brown was dedicated to constructing an organized aviation industry that provided efficient service to the postal system as well as passengers. One of Postmaster General Brown's first steps was to change the way air mail carriers were paid from the poundage and mileage systems to a space system which paid carriers for the space used by the Post Office on the aircraft- Such compensation was designed to encourage companies to purchase and operate larger airplanes which could also be used for passenger service. With the postmaster general's legislative power under Waters, Brown controlled competitive bidding (which he unsuccessfully attempted to eliminate). Standards for air carrier service, and personnel matters, including the requirement of cabin attendants to csire for passengers were also within his purview. Brown also set about building the foundations of an airline system by manipulating sections of the Waters
Act to, in effect, subsidize the large established airline companies- According to Morgan (1981: 16), "by 1933 the
* Big Four,' United, American, Trans World Airlines, and
Eastern, collected nearly 19% of the *19-4 million paid to airmail contractors." Only those companies which had
10 operated a daily schedule over at least a 250—mile route for six months were eligible to place air mail transportation bids under Brown's administration- This rule, coupled with the discretionary privileges of the Postmaster General to redesign and extend routes, had the effect of blocking any smaller airline from the competitive bidding process. In an e-ffart to break into the industry some smaller airlines attempted to apply for operating shorter, completely new routes. An example of such an attempt is found in the actions of the owners of the Robertson Aircraft Corporation who sold the corporation to Universal Aviation Corporation
(later to become American Airways) and then invested their profit in a small passenger carrier, Robertson Airplane
Service Corporation. The Robertson service began to operate daily between St. Louis and New Orleans, a route of less than 250 miles—but American Airways was officially awarded the route. Postmaster General Brown's response is outlined by Davies (1972: 124): The Postmaster—General extended the latter's {American Airways} route from Atlanta to El Paso at Jackson in the State of Mississippi. The extensions were at right angles to the basic route and went north to Memphis and south to New Orleans. At the same time the route from Chicago to St. Louis, also held by American Airways, was extended to Memphis, creating a through routing from Chicago to New Orleans.
Postmaster General Brown's attempts to create a rationalized and uniform air carrier system naturally met with opposition from those who fell victim to his
11 authoritative regulatory approach. Chief among the opposition was Tom Braniff of the airline later to be named for him and a smaller carrier serving a New York to
Washington route. According to Thayer (1965: 12) the New
York to Washington carrier joined forces with a reporter,
Fulton Lewis, Jr., of the Hearst newspaper chain, to take the evidence of how the low bidder had lost out to Brownian manipulations to a Senate committee headed by Hugo Black.
Then Senator Black persuaded President Franklin D- Roosevelt
that the existing air mail route certificates, implemented
by Brown, were illegal and should be canceled (Schlesinger,
1958: 451). Under the Roosevelt administration a new
Postmaster General, James A- Farley, was appointed. Upon
report of the Black committee's investigation of the Brown
regulatory approach, Farley issued an order to cancel all domestic air mail contracts. With this action, the Army Air
Corp took over the task of flying the mail. This was to
become a tragic undertaking, as many army pilots and aircraft were lost to poor weather, inadequate instruments, and inexperienced pilots. The Army carried air mail from
February 19, 1934, to May 8, 1934. During this four—month period the army lost 12 pilots in 66 accidents and damage to equipment totaled $5,177,599 (Aircraft Yearbook. 1937).
Schlesinger (1958) suggests that this event was the first major setback for the popular Roosevelt administration since it appeared responsible for the unnecessary loss of lives.
12 The Air Mail Act of 1934, also known as the Black-McKeller
Act (48 Stat- 933), was the Congress' official response to the questionable activities of the office of Postmaster
General- The Black-McKeller Act required competitive bids, as had been the insistence of Congress all along, but it also allowed loopholes for the discretion of regulatory agencies to favor certain companies by extending air mail routes.
Although Brown was an aggressive and authoritative postmaster general, the abandonment of his regulatory approach was precipitated not necessarily by a new
Democratic administration, but more by an "emotionally charged political climate, and the zeal of an aggressive investigating committee" (Thayer 1965: 14)- The typical investigative committee of the time usually sought to find an evil conspiracy, and what made the Brown incidence "evil" was the charge that meetings between Brown and the Big Four airlines were held in secret. The politics of the Roosevelt administration made it impossible to retain any of Brown's regulatory approach especially after the Black committee's report- This seemed an unusual position for an administration that typically embraced an expanded role of governmental responsibility- Ironically, the Brown scheme for the airline industry essentially remained in tact-
Although Postmaster General Farley had attempted to block the Big Four from bidding on his air mail contracts, they
13 nevertheless managed to circumvent Farley by submitting the
lowest bids (Thayer, 1965).
Although Brown's actions appear to be collusive, his
motivations seemed to have been aimed at the protection of
an infant industry-
This was Brown's idea of the right way to set up the airline industry, instead of an uncontrciied free-for—all with contracts being let to the lowest bidder, which could have led to a cut-throat policy of survival of the fittest—with no guarantee that the fittest would be the survivors- (Davies, 1972: 124)
Perhaps the Brown policy cancellation was an inevitable
consequence of any political appointee with a great deal of
policy discretion- Spencer (1941) suggests that such
interest group opposition is to be expected when a
regulatory agency is set up with quasi-judicial,
legislative, and executive power- Thayer (1965: 16)
speculates "that without Brown's intervention and his
ability to comprehend the need for large airlines, the
industry might not have advanced beyond the limits set by
the railroad map; there never has been a transcontinental
rai1road -"
As Brown's regulatory approach fell victim to interest group politics, it also became apparent that the Roosevelt administration, like its predecessors, knew very little about the uniqueness of the airline industry. Such was reflected in the policy confusion found in the actions of both Senator Black and Postmaster General Farley. According
14 to Smith (1942), Black favored both competitive bidding and subsidies to air carriers, presumably Farley concurred.
B»Jit, these two notions are quite contradictory: the policy assumption behind subsidies is that in order for an industry to continue to provide public services, then the government must accept some financial liability. This assumption is ultimately in conflict with the notion of competitive bidding, in that the cost to air carriers of bidding below cost is absorbed within the government subsidy.
Over the next few years a policy vacuum emerged as the airline industry essentially operated under an overlapping patch work policy environment- Three agencies shared responsibility for airline regulatory policy: the Post
Office designated air mail routes and schedules, the
Interstate Commerce Commission fixed rates, and the
Department of Commerce licensed planes and air crews within its Aeronautics Branch. This situation led to interdepartmental animosity over the lingering concern of the cost of subsidy. None of the agencies designated with the duty to regulate the industry wanted to bear the costs of reimbursements to air carriers for maintaining passenger service- Clearly regulatory policy aimed at promoting the aviation industry was under serious political controversy as early policy-makers attempted to meet a variety of conflicting policy goals without adequate understanding of the role of government subsidy, due no doubt to the strong
15 political opposition which was carried even into the
Democratic administration which had typically embraced government intervention-
Phase Two
The policy void began to be filled again as it became
increasingly apparent that the industry required regulation.
The new policy relationship between the government and the
industry was broadly located in the Department of Commerce,
the Interstate Commerce Commission, and in the offices of
the Secretary of War, Secretary of the Navy, and the Army
Air Corps.
By 1938, President Roosevelt became convinced by his experience with the Brown policy legacy that the proper
place for aviation policy rested in an independent regulatory commission. Apparently since political
influence,^'inside and outside of government\ and the development of systematic airline policy, mixed as well as oil and waterf the prevailing theory of the day lead
Roosevelt to adopt an approach which attempted to separate political influence from regulatory policy-making.
Finally, in June 1938, the Civil Aeronautics Act was passed by the Congress and signed by President Roosevelt, creating a new kind of independent aviation agency, "which would keep its functions as an agent of Congress separate from its
16 from its functions as an agent of the President" (Burkhardt, 1967: 14).
Although most of those who participated in aviation policy-making viewed the actions of several Postmaster
Generals as scandalous, an underlying current of regulatory philosophy at the time was almost identical to the regulatory philosophy of the former Postmaster General
Brown. "The purpose of the 1938 Act was to promote competition, while avoiding uneconomic paralleling of routes or duplication of facilities" (Meyer and Oster, 1981: 18).
In other words, the purpose was to develop a rationalized airline system provided for the public use-
Specifically, the Civil Aeronautics Act of 1938 (52
Stat. 973) established the Civil Aeronautics Authority, later known as the Civil Aeronautics Board (CAB). The CAB was responsible for setting safety standards, investigating aircraft accidents, awarding route certificates, and establishing air fare controls. This era also included an overall increase in regulatory policy activity throughout government. With the economic disasters of the 1930s and
1940s, public distrust of the "free market" also grew.
Regulations to smooth the economic ups and downs of the market were widely embraced. Similarly, several well publicized air craft accidents drew attention to safety concerns of public air travel- Therefore it was a natural progression for the CAB to control both the economic and
17 safety aspects of the airline industry during the second phase.
According to the Civil Aeronautics Act of 1938, the
CAB'S basic mandate was to consider in "the public interest and in accordance with the public convenience and necessity" the following objectives:
1) The encouragement and development of an air transportation system properly adapted to the present and future needs of the foreign and domestic commerce of the U.S., of the Postal service, and of national security- 2) The regulation of air transportation in such manner as to recognize and preserve the inherent advantages of, assure the highest degree of safety in, and foster sound economic conditions in such transportation, and to improve the relations between and coordinate transportation by air carriers. 3) The promotion of adequate, economical, and efficient service by air carriers at reasonable charges, without unjust discrimination, undue preferences or advantages, or unfair or destructive competitive practices. 4) Competition to the extent necessary to assure the sound development of an air transportation system properly adapted to the needs of the foreign and domestic commerce of the U.S. , of the Postal Service, and of the National defense. 5) The promotion of safety in air commerce 6) The promotion, encouragement, and development of civil aeronautics. (52 Stat. 973,1938)
However, it may appear to analysts that the goals of the Civil Aeronautics Act of 1938 were no more accurate than the inconsistent and uncoordinated policy environment which
Brown was in the process of changing when his air mail contracts were canceled- Such policy goals of the Civil
Aeronautics Act of 1938 laid foundations which later would
18 be challenged by the Airline Deregulation Act of 1978.
Again the conflict over the proper role of government is woven throughout the phases of the government-industry
relationship. That is, as seen in phase one the conflict is whether to subsidize or not; in phase two the conflict is
not so much over proper involvement as it is over determining which of the multitude of agencies responsible
for aviation policy should control which aspects of the
industry- Finally, as will be discussed further under
"Phase Three," policy concerns again arose as to how much
government intervention into the industry was appropriate-
Phase two of airline industry development continued
through the creation of new agencies involved in regulating
aviation- During the late 1950s, the CAB took a special
protectionist approach to economic regulations, an approach
which was primarily directed toward protecting the "Big
Four," yet in a different manner than that of the
protectionism of the Brown administration- During the Brown
tenure, economic regulations were primarily used in an attempt to protect the infant industry from free market
realities- The CAB no longer had total control of the aviation industry in terms of safety rulemaking and regulations- The Federal Aviation Act of 1958 essentially
transferred the safety rulemaking role of the CAB to the
Federal Aviation Administration (FAA). And, in 1975, accident investigation became the responsibility of the
19 National Transportation Safety Board (NTSB). This structural move galvanized the CAB's function of economic
regulator- The agency was profoundly changed once safety was no longer its concern.
In addition to the change in the political climate
from the ardent New Deal policy supporters, change also was
made in the way policy makers thought about aviation
regulation- The Federal Aviation Act of 1958 came about as
many commercial and military aviation experts voiced concerns of the growing congestion of airspace which
inhibited military and civilian aviation- Congress set up
the Airways Modernization Board, a temporary board to
"provide for the development and modernization of the national system of navigation and traffic control
facilities to serve present and future needs of civil and military aviation" (71 Stat- 349). President Eisenhower
appointed General Elwood R. "Pete" Quesada as chairman of
the Board, and the Senate confirmed the appointment on
August 16, 1957 (Burkhardt, 1967: 22). This appointment, although not controversial at first, set the stage for
political competition between civil and military aviation-
As President Eisenhower urged Congress to establish an independent aviation agency, the Pentagon, along with
General Quesada, emphasized the importance of military participation in any new and regulatory agencies.
Recognizing the potential for deep conflict, and the serious
20 political implications of a strong military role in controlling military and joint usage airways. Congress chose not to attempt to solve the problem within the framework of the Federal Aviation Act of 1958 (Burkhardt, 1967: 23). As it turned out, the joint usage of airspace system has become a cooperative effort by both military and civilian aviation.
The administrators of the Federal Aviation Agency and, later, the Federal Aviation Administration in the
Department of Transportation, have typically been both substantively and symbolically, important. The President's
choice of officeholder says a good deal about the
President's approach to aviation policy. For this reason, a
review of early Administrator's policy orientations will
help to establish the ideological and policy environments.
General "Pete" Quesada, the first administrator of the
Federal Aviation Administration, played an extremely
important role in the creation of second phase aviation
policy in terms of airspace usage as well as regulating
pilot qualifications and operations. Speaking of General
Quesada, Burkhardt (1967: 41) states that "with his
military training and experience as a command pilot and aviation officer, it was inevitable that General Quesada would bring with him to the job of FAA Administrator some of the habits of a lifetime." These habits included an authoritarian sense of discipline as reflected in a most
21 controversial regulation for cockpit behavior. The
regulation required that airline captains remain in their seats continuously except for restroom breaks, and these
breaks, not for over seven minutes. This attracted a great deal of opposition from the Air Line Pilots Association, but
General Quesada refused to rescind the regulation.
The next Administrator of the agency was Najeeb E.
Halaby, who was appointed by President Kennedy to replace
General Quesada- As a highly qualified civilian, Halaby's
appointment was less controversial than his successor.
Halaby also focused on changing the hard line image which
pilots maintained of the agency by meeting with pilots across the country in informal question—answer sessions
(Burkhardt, 1967: 49)- Halaby was seen as a more friendly administrator who developed special relationships with commercial, private, and military aviation enthusiasts- It was personally unfortunate for Halaby, as his tenure in office ended, that he also managed to make several powerful enemies among Congressmen from the districts which Halaby visited.
The third Administrator, the last to preside over an independent agency, was General William F. McKee, appointed by President Lyndon Johnson. General McKee did not bring to the job any aviation experience, but he did surround himself i^xth competent aviation and policy advisors. McKee also has been characterized as a "hard-working, energetic, and even-tempered" administrator. His popularity probably helped mute opposition to the Department of Transportation'* creation^ even though the new department meant a subordinat; role and a name change for the FAA.
Phase Three
As seen through the phases of the industry development and the industry—government relationship, and through the
politically important appointments of the three early
Federal Aviation Administration heads, it is apparent that
political struggles over the proper role of government persisted. Similarly, and more important to the analysis at hand, is the apparent neglect during such political debate of the often stated goal to protect the public safety.
The third phase of the airline industry development is no different in the respect that public safety seemed to be of secondary concern- The third phase began as discussion of deregulation took shape in general among political actors within and without government- According to
Pertschuk (1982), the consumer movement of the late 1960s and early i970s encouraged more than two dozen new laws ^or consumer protection, environmental protection, and occupational health and safety were enacted. There is adequate evidence to suggest that the Consumer Movement was merely an element of a larger new populist movement which
23 xnspxred the civil rights movement- As consumer awareness of the 1970s began to heat up, economists emphasized the inefficiencies of heavy handed regulations for which consumers ultimately paid. Stephen Breyer, a consumer advocate and economist assigned as special counsel to the subcommittee on Administrative Practice and Procedure of the
Senate Judiciary Committee in the 1970s, advised Senator
Kennedy, then chairman of the subcommittee, to pursue hearings on the anticompetitive regulatory practices of the
Civil Aeronautics Board. For Kennedy, airline deregulation provided several opportunities: first, it was a political cause which allowed him to continue the liberal fight for consumerism, while: second, airline deregulation was seen as a tractable problem with concrete and timely solutions.
Likewise, a subcommittee investigation into the anti competitive practices of the CAB in a formal Congressional hearing which, while sensationalizing about unjust high prices of air transportation and the problems of lost luggage, attracted the typically pro—consumer media-
Senator Kennedy and the subcommittee staff, including
Breyer, were not the only significant initiators of airline deregulation; academia played a role as well- As economists were compiling sophisticated evidence of the inefficiencies of regulations, political science literature provided a theoretical description of the interplay between regulatory agencies and the businesses they seek to regulate.
24 Bernstein (1955) describes this phenomenon as agency capture. Regulatory agencies appear to have been captured when they seemingly behave in the interest of the regulated rather than in the interest of the public, either at the origination of policy or through cooptation by business
(Gerston, Fraleigh, and Schwab, 1988).
In the case of the CAB, Kennedy's subcommittee staff attempted to show that the CAB acted in the interest of regulated air carriers and protected them through anti competitive practices. This line of argument appeared quite reasonable at the time of the hearing, but the argument as explanatory theory is weakened by several political events that took place over the course of deregulatory policy-making. First, it may be very true that the CAB in the 1960s and 1970s did act to protect regulated air carriers; the CAB, however, later became the captive of
Presidential politics as well as the popular political environment of regulatory reform. Although the drive to deregulate began during the Ford administration, it was
Carter's appointment of Alfred Kahn, an outspoken and dedicated deregulatory advocate, to head the CAB that wrenched the captive hold from the airlines. The second political event which changed the capture relationship between the CAB and regulated air carriers came as Kahn essentially implemented airline deregulation without a legislative directive by lifting almost all entry and fare
25 restrictions. These changes in policy substantially rendered useless any airline opposition to deregulatory legislation. In fact, in the face of virtual market uncertainty under Kahn's hands-off policy approach, the airlines ultimately modified their position on deregulation in hope of a more secure operating environment (Derthick and
Quirk, 1985). This hope is ironic considering the economic chaos surrounding the industry after 1978. But, airline carriers could at least predict somewhat the industr-y atmosphere under a system of legislation which would eventually dismantle the CAB. Similarly, these administrative deregulatory actions limited the Congress' ability to pass deregulation legislation. Kahn's actions created the potential for 1) the CAB, under the political direction of the President, to beat Congress to the deregulatory punch, and 2) conser-vative deregulation advocates (in favor of deregulation in order to trim the size of government) to come into conflict with liberal advocates (in favor of deregulation for the consumer interest rationale). These potentialities were clearly evidenced even prior to the Carter administration, by the varying viewpoints of Senator Kennedy and President Ford.
However, it appears that the conflict never occurred, or at least was subsumed in the vast political popularity of deregulation.
26 Popular hostility toward big government and government distrust grew after the Watergate scandal. And, when
President Ford took office, the most pressing issue which
his administration had to address was inflation- President
Ford along with leading economists and prominent citizens
held meetings to discuss possible remedies for inflation.
At these meetings most of the economists argued that anti
competitive policies of regulatory agencies were
contributing to the problem of inflation through such things
as the protection of monopolies, and financial penalties on
industrial polluters (Balz, 1974). As suggested above,
inflation was not the only consideration for President
Ford's support of deregulation, "As a conservative. Ford
sought to embrace deregulation much more broadly and to
reduce government intervention in business conduct on a wide
front, but the consumerist orientation of Kennedy meant that
his advocacy was much more narrowly confined" (Derthick and
Quirk, 1985: 51). In addition to the regulatory
relationship between the airline industry and government,
there are overarching ideological or philosophical
approaches of policy actors which are manifested in public
policy directed toward the airline industry. As can be seen
in the development of the industry-government relationship,
the political proclivities of policy actors influence
regulatory policy outcome. For example, in phase one of
industry development, the approach of regulatory policy-makers was one of exploring the possible usefulness of aviation for the government. The basic approach of policy-makers in phase two was to protect the industry from market uncertainty, while the phase three approach has primarily focused on protecting market competition. In other words regulatory policy-making is not an exercise in pure reason, but rather seethes with political and ideological struggles over such things as the definition of the public interest, and discerning the limitations of public sector activity within the private sector. In the case of the airline industry, the boundary between the public sector (government responsibility for regulatory policy) and the private sector (industry operations) is difficult accurately to map, because the boundary continually moves-
Conclusion
Now, at a time when airline accidents receive a great deal of media attention, the possibility that the government—industry relationship may be implicated as a confounding variable in airline accidents in the last ten years, makes tragic events seem even more tragic. It also makes the proper fit between the public and private sector relationships of greater importance as well. Hence, this research will attempt to determine the nature and extent of relationships between deregulation of the airline industry
28 and airline accidents- In addition, this research hopes to provide a greater understanding of the character of regulatory and deregulatory policy types- The ways in which policy makers distinguish policy type is of importance to scholarly evaluation of policy outcome.
This study employs a twofold approach as it seeks answers to questions about the safety of air travel. The
twofold approach includes a time series analysis of safety
issues both in specific acciden-its and in the greater risk to
the public over the last two decades, and a case study
analysis of the intent of policy—makers when considering
deregulation of the industry.
In an age where it is considered commonplace to board
an aircraft at one location and in a matter of minutes or a
couple of hours, domestic air travelers disembark at their
destination. To the untrained eye all would appear to be a
relatively simple system, travelers enter a large building,
the terminal, wait to be called to board, walk down a small
hallway, and enter a cabin that for all intents and purposes
to the traveler is just like a small room- It has walls, a
ceiling a floor, a kitchen, and even restrooms- The only
difference is that this room flies through the air at speeds
reaching 500 miles an hour, at an altitude of 40,000 feet.
The traveling public pays little attention to all the
systems and processes used by the industry and government to
ensure they arrive at their destination. That is, the
29 travelling public pays little attention, until an accident occurs- This study calls into focus the potential consequences of deregulating the airline industry, by delving into the specific causes of each fatal airline accident, prior to deregulation and after. If an accident after deregulation was found to have been caused by something related to cut throat competition, then it would seem that deregulation of the industry has had ill effects
on public safety. It is anticipated that such an analysis
will provide evidence suggesting that there has been
neglect of safety both by the industry and by policy
makers. CHAPTER II
PARADOXES, THEORIES, AND ORIGINS
The American Democratic Context:
Paradoxes
In addition to the relationship between the airline
industry and government, overarching ideological or
philosophical approaches of policy actors are manifested in
public policy directed toward the airline industry- As can
be seen in the development of the industry—government
relationship, the political proclivities of policy actors
influences regulatory policy outcome. For example, in phase
one of industry development, the approach of regulatory
policy—makers was one of playing catch—up to more advanced
European aviation activities, while exploring the possible
usefulness of aviation for military and postal services.
However, advancement in U-S- aviation technology was limited
by strong ideologies calling for the limited use of
government spending and government subsidies. As a result,
regulatory actors in phase one were hesitant to approve
policy aimed at advancing the industry, particularly policy
aimed at creating a regularly scheduled passenger air
transportation system.
As a seemingly ideological reversal from the first
phase policy—makers in phase two took an approach toward
policy to protect the young industry from market uncertainty. The basic ideology manifested in phase two can 31 be characterized as a belief in the separation of administrative activity from political activity. For example. President Roosevelt placed aviation policy-making responsibilities in an independent regulatory agency, later known as the Civil Aviation Board. Although this phase is relatively lengthy, enduring from 1938 to 1977, the basic policy approach was to promote a competitive airline marketplace, while maintaining a systematized air transportation industry.
Phase three of the airline industry and government relationship now appears to be best known for its deregulatory characteristic- During the late 1970s and the
1980s, U-S. political leaders expressed concern for the size of the federal government and the extent to which the federal government is involved in regulating the private sector- This concern was expressed by both Democrats and
Republicans, and has been manifested in airline deregulatory policy.
As seen above, regulatory policy-making is not an exercise in pure reason, but rather it is a political and ideological struggle over such things as the definition of the public interest, and the limitations of public sector incursions upon the private sector. In the case of the airline industry, the boundary between the public sector
(government responsibility for regulatory policy) and the
32 private sector (industry operations) is difficult to map
accurately, because the boundary continually moves.
The attempt to identify the shifting boundary between
public and private spheres at a given time requires
addressing the question of the proper role of government.
An examination of the theoretical context within which
democratic principles reside is necessary. The uniqueness
of the American political context and experience imbues the
role and nature of government with a special character^ a
character that is a paradox in itself, and it comes about in
part as a result of the evolution of the seventeenth-century
political philosophy of liberal individualism.
The origin of liberal individualist thinking can be
traced to thinkers such as Martin Luther, who, in 1517,
helped mark the beginning of movement from the feudalistic
traditions of agrarian community culture and social
hierarchy, to the individualistic orientation of Luther's
theology and of the Reformation. However, the American
tradition and evolution of liberal individualism has
primarily been attributed to the influences of Thomas Hobbes
and in particular, John Locke. The political philosophy of
Locke essentially included the features of individual
freedom, equality, and natural rights. These features were grafted onto the American political rootstock in large part
because of The Federalist Papers written by John Jay,
Alexander Hamilton, and James Madison. These traditions of American liberal individualism Sir^ significant because of their contribution to the parallel development of capitalism and democracy, and the development of these traits also have
impacted the typical public responses to and demands on the
government.
As the philosophy of liberal individualism has evolved,
so too has the public philosophy which embraces democracy.
There are several basic traits within that political
philosophy which have allowed American democracy to maintain
its paradoxical nature. First, the paradox is found in
society's demands of government to take an active role in
providing for the public good, while insisting on the
exercise of individual freedom without government
intervention- Thus, the paradox creates tension between the
public and the private- It is difficult to distinguish the
point at which the functions of the private sphere end and where those of the public sphere begin- Since the Airline
Deregulation Act of 1978, it has also become difficult to distinguish between the proper functions of government in
the private sphere. This is not to suggest that distinguishing between that which is public and that which is private was ever easy, but that the boundaries 3.rs further confused by the issue of deregulation. The individualistic liberal contention of limited government implies that the public sphere ends with removal of obstacles to individual pursuits of economic and social
34 goals, yet the practice of contemporary bureaucratic government is expanding as administrators are asked to do more and more for individuals as well as society-
These are goals which aire hardly complementary; during
phase one, the potential success of developing an industry which systematically and rationally pursued advancements in
technology as well as passenger transportation would have depended upon fiscal rationality- Phase one policy-makers
were grounded in a political philosophy of conservatism
which limited a rational approach to fiscal policy making,
since fiscal rationality requires a measure of control that
is anathema to "free enterprise." Because of this broader
philosophical conflict, the air transportation policy passed
by Congress, such as the Kelly Act, placed the greater
financial burden on the private sector- In phase two, members of Congress were constrained by the experiences of
the Great Depression- While the Depression and World War II made notions of economic planning somewhat more palatable,
policy—makers chose nonetheless not to appropriate governmental resources to develop the new and highly
technologically demanding airline industry.
The first two traits of the American democratic context are directly linked to ideological positions, and disputes can only be waged from the grounds of these normative assumptions- Conservatives typically call for limited government intervention, while contemporary liberals believe
35 in the positive use of government- However, the third trait, rational empiricism, attempts to lay aside normative assumptions for "scientific" approaches- Rational empiricism has extreme confidence in the notion that through reasoning and empirical evidences, truth and knowledge will prevail- The ways in which this "truth and knowledge" ars obtained should be one of primary concern- That is, rational empiricism as a procedure provides a context for decision making which focuses on the attempt to maximize
benefits and minimize costs- Just as scientific procedures require multiple sources of input, so too does democratic
procedure, argue the rational empiricists- With discussion and deliberation, multiple sources of input are rationally
processed through the system and the public good is supposedly ultimately produced-
The paradoxes of the American democratic context are revealed in an analysis of airline deregulation in that
throughout all the phases of the government—airline industry regulatory relationship, policy actors have behaved as though the paradoxes did not exist, or at least as though a rational approach to policy would produce outcomes reflecting the policy-makers' own notions of the public interest, even as these approaches appear to be rational to both the public and to policy-makers- For example, during phase one of airline industry development, the policy—makers within Congress were primarily concerned with limiting
36 governmental financial responsibility for the industry, while promoting its development relative to the development of European aviation- The result of the anti-subsidy policy orientations within Congress was, in fact, to create a policy void which lasted into the second phase of airline development. Along with this policy void, the integration of a national airline system also failed, placing the United
States even further behind in the international race to develop aviation.
During the second phase of airline development, it became apparent that air travel was a viable system of transportation not only for parcels but for the public, and the military as well. Because of the public demand for access to air transportation, and the potential for military conflict, it was necessary for policy makers to create a protected environment for the industry in order to insure the overall survival of air transportation. It now appears that within the third phase of airline development some policy makers view government interference as harmful to the public interest by creating elevated fares- However, a significant question must be raised about the assumption that the public interest is best served, or only served, by resolution of economic policy issues. This economic policy orientation is tested in this research to determine its appropriateness for the Airline industry and, by extension, other targets of deregulatory policy- In the present case,
37 questions of the public's interest in safety provide an important opportunity for an examination of public interest concepts as they apply to issues of government protection through regulations of the public interest-
Questions which seek to go beyond economic definitions of the public interest have not been addressed by the literature- Scholars, like policy-makers, have assumed that policy can be produced through rational empiricism, and go further by assuming a rational empiricist framework for their attempts to theorize about policy processes. In order to theorize about the origin and processes of regulatory and deregulatory policy, and to theorize specifically about the
Airline Deregulation Act of 1978, the analyst must reconsider the theoretical significance (or lack thereof) of previous works.
The Broader Policv Perspective
Lowi's Policv Types
Regulatory policy has typically been considered a subsidiary study of the broader areai of public policy (Lowi, 1964; Ripley and Franklin, 1976). Chief among those scholars who have viewed regulatory policy as a subset of public policy analysis, Lowi (1964) posits a typology of public policies from which he attempts to discuss policy's origins in group politics- Lowi classified policies according to their impact on society, and he identified
38 three categories of impact. First are policies which are distributive in nature: they allocate limited government resources among those who compete for such resources, but in apparently non-zero-sum ways- Second are redistributive policies. "Redistributive policy involves a conscious attempt by government to manipulate the allocation of wealth, property, rights, or some other value among broad classes of groups in society" (Ripley and Franklin, 1976:
18); the politics of redistributive policies are overwhelmed
by their zero-sum nature- The third classification contains
regulatory policies through which the government extends control over the behavior of individuals or groups in the private sector.
Within Lowi's typology of public policy there are three basic contributions which have seemingly withstood the test of time. Likewise, there are three major criticisms which through observation and analysis have been borne out in the
literature- One of Lowi's contributions to policy analysis rests in his probing concern for locating the arena of political power. Lowi posits question about those individuals and groups who seem to use their political power to gain specific policy outcomes which are to their advantage- His second contribution is his recognition that interest group politics are time-bound, meaning that interest groups only exercise political power over issues which immediately affect the interest of the group-
39 Similarly, Lowi (1979) suggests that in regulatory policy no one interest group can maintain power in all policy areas.
The third contribution found in Lowi's work is the fact that he was among the first to consider public policy-making as an arena for political struggle rather than as simply an institutional process (for examples of this early approach, see Wilson, 1974)-
Despite Lowi's contributions to our knowledge and understanding of public policy analysis, his work has been the target of three basic and viable criticisms First,
Hayes (1978) suggests that Lowi's typology assumes that the
three policy types are mutually exclusive; only policy which redistributes the allocation of wealth among groups, for example, can be considered redistributive, even though some regulatory policy is surely redistributive in practice-
Second, Lowi also assumes a unidirectional flow in redistributive policy. But, the redistribution of income from the lower class to the upper class, via regressive taxes, is not explained by Lowi's typology (Piven and
Cloward, 1982)- Finally, Lowi failed, perhaps out of a disaffection with pluralist arguments, adequately to deal with the politics of issue coalitions- These issue coalitions are often referred to as sub—governments, and they consist of an interest group, congressional committee or subcommittee, and a governmental agency-
40 In the case of airline deregulation, the contributions of Lowi's work are nonetheless relevant to the analysis- Lowi's contributions are that they bring to the forefront of deregulatory analysis unavoidable questions, particularly concerning the explanatory limitations of his typology. It is possible to discover the individuals and groups who exercised political power within the context of airline deregulation. It is also possible to determine the extent to which these individuals and groups could exert their political power, and the chronology of their participation.
However, the use of Lowi's typology for an analysis of airline deregulation is limited by the fact that individuals and groups with specific interests use political power to gain policy outcomes during all three types of policy activity, distributive and redistributive as well as regulatory- Under Lowi's typology, the interest group factor can not alone distinguish whether a policy activity is distributive, redistributive, or regulatory, and it is, therefore, not enough to explain the uniqueness of regulatory and deregulatory policy processes relative to other policy types. For example, the specific interests of the small upstart airlines were served during the early years of deregulation by "redistributing" wealth and profits from the large airlines to the smaller. During the early years of airline deregulation, small upstart airlines were able to attract business and profits in some markets away
41 from the major airlines. It can be posited that through government activity (deregulating the airlines) a portion of the wealth was "redistributed" among different groups, an outcome for which Lowi's typology cannot account- The utility of Lowi's typology to analysis of airline deregulation is also limited in that such a typology contains no mechanisms for explaining the public/private boundary problem discussed above- In other words, deregulationy or the instance when policy responsibility shifts from the public sector to the private sector, as in the case of airline deregulation, is not addressed within such a definition of distributive and redistributive policy because Lowi implies that government maintains allocation authority in both policy instances. Similarly, Lowi only discusses regulatory policy in terms of government intervention and activity- When certain responsibilities, such as airline route determination, are removed from government and placed within the private sector, the
"regulatory" policy category is not adequate to explain such shifts. It is impassible to model deregulatory activity within the narrows of Lowi's typology.
In addition to the difficulty of superimposing Lowi's typology onto an analysis of airline deregulation, the subgovernment politics of airline deregulation is also a unique aspect of the airline policy-making process which
Lowi's policy typology fails to address. Although scholars
42 and policy analysts identified patterns within the policy making process which model subgovernment politics, it appears that airline deregulation subgovernment activity contained a pattern of politics different from the typical pattern of political movers and shakers in Washington-
Within airline deregulation, the political principal actors were the consumer—minded chairman of a Congressional subcommittee. Senator Ed Kennedy, and his special committee advisor, Steven Bower; a political appointee to the CAB who
was an outspoken proponent of deregulation, Alfred Kahn; and a deregulation-minded president, Jimmy Carter- Within this
coalition, it appears that the pattern in airline deregulation was different from that which is the typical
pattern. For example, the strong advocacy or opposition
interest group, typically found in subgroups is not found
here, except by way of Ted Kennedy's interpretation of consumer interests. It was basically upon Steven Bower's
recommendation that Kennedy took up the consumer rights torch thereby heralding airline deregulation. Perhaps the
Ralph Nader groups, as an interest group, were influential, but Nader personally was not that interested in airline deregulation beyond its usefulness as an example of the need for consumer protection (Derthick and Quirk, 1935).
However, the President's appointment of Alfred Kahn was of significant importance to deregulation, in that policy was cjirectly and instantly effected without the lengthy and
43 messy process of legislative action. The tight political interplay within the subgovernment essentially locked the door to other interest group influence- In the early
Congressional hearings on deregulation, there was little organized interest group opposition, with the exception of the Air Line Pilots Association (ALPA), who were mostly concerned with the impact deregulation might have on safety, and who carried the safety issue single-handedly and without the backing of influential subgovernment players. In fact, it was not until it became apparent that airline deregulation was going to have a large economic impact on the industry, well along in the policy—making process, that major airlines began even a limited effort to participate in the activity surrounding airline deregulation-
Since Lowi's typology does not address the overlapping of policy types, the play of interest group politics within indistinguishable policy types, and the inability to explain the uniqueness of airline deregulation from a subgovernment perspective, make it necessary to investigate the politics of airline deregulation further-
Haves' Modification of Lowi's Typology
Many scholars since Lowi have attempted to improve his policy typology by adding categories or expanding the definition of elements of the categories. Unfortunately, many of these attempts fail in much the same way that Lowi's
44 original typology fails. Hayes (1978) has been more successful than most in reshaping Lowi's types into distinctive policy categories. Hayes suggests that the politics of public policy contains degrees of consensus and conflict of demand over a variety of policy issues- The demand for policy, or for non-policy, he argues, can be strong or weak. Hayes also identified governmental responses to demand patterns which vary according to the degree of consensus or conflict-
The first of Hayes' policy types is "the politics of non-interference." This category is essentially laissez faire politics without government involvement in private sector affairs. Category two includes the "politics of self—regulation," in which the government allows specific organizations to control entire markets through special legislation. This category of policy might ideally have described the CAB prior to deregulation- The CAB certified airline routes and fares of only the "Big Four," thereby helping the "Big Four" to control all competition-
Hayes' third category of policy types is "the politics of distribution." In this category, cooperation and consensus are maintained among the players, but pressure politics is still present because a certain group seeks explicit benefits from the government in the form of distributive or porkbarrel politics- Category four, according to Hayes, is "the politics of non-decision." It
45 xs difficult, as Hayes points out, to identify an example of
non-decisions. However, as Bachrach and Baratz (1970: 40)
argue, non-decisions "can be explained partially or entirely
in terms of forces, influence, or authority." Power
struggles exist in both the politics of distribution and in
the politics of non-decision-making. Bachrach and Baratz
(1970) also suggest a variety of situations that manifest
non-decisions- Political systems and sub-governments often
operate according to established procedures which may be
institutional, or they may be normative rituals. In the
case of the airline industry^Alfred Kahn, President Carter's
appointee to the head of the CAB, practiced non-decision- making by allowing any and all airlines to provide air service to any and all markets- By not choosing between competing airlines, Kahn created an environment of uncertainty in which most of the larger, established airlines could not continue to operate- Such non- decision—making was an institutional maneuver which forced the airlines to re—think their managerial approaches.
Members of Congress may also choose non—decisions as a method for appearing to respond to conflictual demand patterns, without maintaining any significant policy intervention- In other words, members could practice non interference through non—decision policies.
Theoretically, "the politics of non-decisions" is similar to the politics of symbolism. Edelman (1964)
46 discusses policy as the use of symbolic politics, which seemingly satisfies non-elite, disorganized opposition.
Edelman (1964: 36) suggests that regulations confer benefits to business, while conveying symbolic reassurances to their ostensible beneficiaries, such as consumers.
However, Hayes provides a fifth category in which there is some policy opposition, and there is at least limited government intervention, "the politics of regulation."
Hayes suggests that this is the category within which
Edelman's observations best fit. Fiorina's (1977) theory
of Congressional behavior helps explain this policy type: members of Congress are primarily concerned with reelection,
and their behavior is modified accordingly. For Hayes,
reelection behavior is reflected in distributive or
porkbarrel policies. Hayes strongly suggests that regulations are an attempt to respond to demands through apparent legislation, while carefully protecting regulations from any significant useful implementation-
Finally, the sixth category is that of "the politics of redistribution." In this category, "Congress actually makes an explicit choice among the contending groups" (Hayes,
1978: 152). The choices available to members of Congress may threaten certain constituency support; therefore, instances of redistributive policies are seldom present in policy-
47 Clearly, Edelman's and Hayes' implications are applicable to the politics of regulation; however, whether they best describe the politics of regulation and deregulation requires careful consideration. Unfortunately, neither Lowi nor Hayes provides adequate contributions to a framework for analyzing the Airline Deregulation Act of
1*^78. Deregulation fails to fit any of Lowi's types, since, as this research will show, the function of deregulating the airline industry does not distribute or redistribute
benefits to any groups. Nor does deregulation fit Lowi's understanding of regulatory policies. Lowi (1964: 697) suggests that majority—sized coalitions of shared interests control regulatory decision—making; it is not clear that airline industry interests controlled deregulatory activity.
A significant purpose of the present work is to make the contention that the politics of airline deregulation and, by extension, most deregulatory policy, can not be forced solely into a model of interest group politics.
Similarly, Hayes fails to explain the political environment surrounding policy-makers, and why policy-makers would choose such options as "non-interference." Hayes also neglects to describe circumstances under which Congress might choose "the politics of redistribution." Airline deregulation presents a case which fits more than one of
Hayes' categories; that is, deregulation could be "non interference," and deregulation could be described by "the
48 politics of self—regulation" as policy-makers wanted to encourage airlines to regulate themselves. Yet again, it seems that Hayes' typology does not quite fit the case of deregulation as "self—regulation," because so many aspects of the airline industry can not be left to self—regulation-
Similarly, the "politics of self-regulation" implies a subgovernment influence in the form of interest group pressure. Such is not consistent with the case at hand
because, deregulation was not advanced by the self interest of airlines- In addition, usage of Hayes' work to define
the "public interest concept" in the case of airline deregulation is much too narrow- The purely economic
meaning within this environment neglects other definitions of the public interest-
A Broader Policy Perspective
Perhaps the most telling criticisms of Lowi and Hayes
rest in their attempt narrowly to explain and to pinpoint
precisely the definition of regulatory policy- By demanding
such precision, these scholars (Lowi, 1964; Ripley and
Franklin, 1976; Hayes, 1978) have essentially narrowed the
scope of policy thinking. Regulatory policy cannot be
illuminated by such a narrow beam of light. Because the
study of public policy is complex and cumbersome, political
scientists try to organize subject matter into manageable
subsets. Such research procedures are often effective, but
49 more appropriate political science research avoids rigid particularizations- Lindbiom (1980) suggests that the policy-making process is not characterized merely by subsets, but by a seamless web which flows through all of the stages of the process at once. Public policy analysis as a sub-field of political science particularizes itself
into sub-subfields- Policy agendas are studied separately
from policy formulation and implementation, for instance, and economic policy is studied separately from social
policy. The inherent tendency of political scientists to systematize and particularize can also be found in the case
study analysis of administrative behavior. Analysis of the
implementation of the Airline Deregulation Act of 1978
suggests the difficulties faced by policy makers and policy
implementors when strict particularization is the normal
administrative procedure or scholarly stance- Policy—makers and policy implementors of Airline deregulation defined the
boundaries of the issue of CAB control of routes and fares as only an economic, hence free market versus governance
issue, when in fact, airline deregulation may involve much more than economics- Policy scholars follow suit, analyzing such issues in economic terms, when the public interest may include significant non—economic considerations- In general, the reductive particularization of economic concerns arises out of another case of particularization, that being the tendency to accept capitalism as merely an
50 economic system found to operate within most democracies-
Reality may very well be that capitalism is so interwoven within cultural and societal norms that capitalism is also a social system- If the reality is that capitalism is more than merely economics, that is, a social system too, then to force scholarly thinking about capitalism into a reductionist economic model is erroneous- Similarly, to force issues of deregulation policy into a model solely reflecting economic activity is also erroneous-
Within regulatory literature, research particulariza tion has been the norm- There is only a scant regulatory literature that addresses the varied faces of regulatory politics- Meier (1985) and Mitnick (1980), for instance, do offer much broader perspectives on regulatory policy, which expand the classical definitions in Lowi's typology. Meier
(1985: 1) suggests that "Regulation is any attempt by the government to control the behavior of citizens, corporations, or subgovernments-" A definition of regulation put forth by Mitnick (1980: 2) refers to regulation as an "interference of some sort in the activity subject to regulation — it is to be governed, altered, controlled, guided, regulated in some way." Mitnick (1980) also contends that when a party (private business) is interfered with by an interferer (government), the interference can produce three basic outcomes: it can be helpful to the party, it can be hurtful to the party or ,
51 interference may produce little opposition from the party.
A deeper comprehension of these basic outcomes may produce a more useful understanding of the "public interest."
Regulatory Policy Origin and Process
As suggested above, an assumption made by practitioners and some regulatory policy scholars alike is that regulations are rightfully and inevitably constructed and
implemented out of purely economic concerns. If such theory equates regulatory policy solutions to economic phenomena via rational empirical processes, then such theory runs headlong into the third paradox of the American democratic
politics. Acceptance of the assumptions of economic phenomena requires acceptance of two other assumptions,
referred to here as sub—assumptions- These are^ first, that government regulation of such things as safety, consumer
protection, and the environment are also purely economic phenomena. Second, with regard to regulatory activity, the government defines public interest solely in economic terms-
Since these sub—assumptions are often questionable, the original assumption suffers incredulity. It seems thus that there is more to regulatory and, therefore, governmental
life than mere economics. It may be that the purpose of government is to provide redress for the ills and abuses of
the free market. But even when the original assumption and the sub—assumption have been rejected by practitioners and
52 scholars (Derthick and Quirk, 1985; Reagan, 1987), little
attention is given to non—economic phenomena. Through
phases one, two, and three of airline deregulation, policy
typically carried a definition of the public interest in
economic terms- In phase one, protecting the public
interest was defined in terms of limited economic expansion
of the industry- By promoting financial support for the
economic aspects of the airline industry, second phase
regulation promoted the public interest by insuring that air
transportation was available- Protecting free market
operations was thought to be the means toward consumers'
ends and, therefore, protecting the public interest in phase
three-
Economic Approaches The essence of airline deregulation in the third phase
was essentially to promote competition among airlines, in an
effort to reduce the cost of air travel to the public- This
focus on economic issues as the primary target of regulatory
and deregulatory policy initiatives is also found in two
academic approaches: theories of policy origin, and
theories about the policy—making process. A distinction
found in theories of regulatory origin concerns the
political intention of regulations, or the regulatory policy
goal. Within this segment of regulatory theory, the
distinction is made between economic and social regulations-
53 This and other distinctions will be compared and evaluated below.
Economic regulations have primarily been used to
control the economic aspects of private enterprise. For
example, authority to leave or enter markets, licensing,
pricing, and monopoly control have consistently been of
major concern to regulatory policy-makers. Traditionally,
such regulations tend to deal with the promotion,
protection, or restoration of competition within a single
industry (Heffron and McFeeley, 1983). In terms of the
traditional boundary between the public sector and the
private sector, the government's positive use of economic
regulations to insure competition has typically increased
the sphere of influence and power of the public sector.
However, since 1978, the deregulation of economic policy has
been presumed to diminish the scope of the public sphere,
while enlarging the private sphere. Airline deregulation's most obvious consequence would seem to be a shrinking of the
public sphere, since deregulation appeared to free the private sphere of government—imposed obstacles to competition. However, it can be postulated that governmental promotion of competition might complicate private sphere operations; that is, encouraging more participants, can be detrimental to the private sphere by creating an atmosphere of uncertainty and cut—throat competition.
54 Mitnick (1980) outlines several theories about economic
regulation and deregulation by dividing the notion of government protection under three basic subgroups: competition protection, private interest protections, and public interest protection. Under the category of
competition protections, Mitnick essentially describes the virtues of maintaining competition already discussed.
The private interest protection category of economic regulatory, and to some extent deregulatory, activity is characterized by the term "industry protectionism." This approach holds that it may be an industry itself which desires economic regulations as a means to protect certainty within the overall industry- In the case of the airline
industry, "industry protection" regulations were desirable for the major incumbent airlines. But for those airlines, or potential airlines excluded by the regulations, deregulation served their "private interest" in a different way from the major airlines. In capitalist logic, the protection of private interests, either through regulation or deregulation, will also protect the public interest, through the benefits of more free and direct competition-
For example, according to capitalist logic, the benefit of competition to the private sector is a greater market share to a larger number of companies. Therefore, competitive policies also serve the public interest by allowing competition to define the number of airline companies from
55 which the public may choose as well as quality and price of services-
As discussed earlier, the regulatory environment of the
CAB prior to the Airline Deregulation Act of 1978 is an example of policy which protected a few companies- However, soon after deregulation, the industry as a whole suffered, while a few upstart airlines profited- The larger airlines had to learn a new management style to reflect a more competitive environment.
In the particular case of airline deregulation, the industry specific issue of public interest protection spilled over into the sphere of private interest protections- That is, a genuine public interest, the
protection of public safety, was made secondary to the private interest protection of competition. It now seems
that airline deregulation is in the process of coming full circle as questions are raised once again about government activity (or in the case of deregulation, government inactivity), but this time the questions are about determining a broader definition of public interest- In the case of airline deregulation, is the public interest really served in promoting competition among airlines? Does government activity directed toward promoting the public interest also mean protecting public safety? Are the answers to these questions mutually exclusive?
56 There is little doubt that the proper response to the questions is, "yes," but it also appears that they are mutually exclusive- It is difficult for the government to
promote the so called public interest of competition, while also protecting public safety- This seems to be true chiefly because of the mechanism chosen by Congress to
implement the promotion of competition: deregulation.
Hence the definition and identification of the public
interest is muddied further, although scholarly attempts
have been made to clear the water- It is not the intention
of this work to attempt to debate public interest theory, or
even to report on all of the literature, but to merely
introduce the issue as being of significance to the case
study at hand.
Private and public interest protections, according to
Mitnick (1980: 85), are bifurcated by "The extremes of
intentional action... classified into those that reflect
private, egoistic, selfish or *self' interests or goals,
i-e-, self-regarding preferences, and those that reflect
'other' interest." The "other" interests, according to
Mitnick, are those of the public- Mitnick (1980: 91) describes the assumptions of public interest theories:
* Public interest' theories of regulations assume that regulation is established largely in response to public-interest-related objectives. Unless one assumes that the state or public mystically acts for itself in seeking the regulation, public interest theories require, in effect, that parties seeking regulation be agents for the public interest. These agents may satisfy their self interest instrumentally
57 through pursuit of public interests objectives (e.g., politician championing consumer regulation to aid reelection), but the theory requires that at least some preferences for the public interest be genuine and terminal -
It would seem that the activities in which government engages ought to be carried out with the public's best interest at heart- It seems simple enough to devise a formula which law—makers could employ to determine what is the public interest in every situation- This formula in a democratic state ought to resemble something of utility for the greatest number of people- In an ideal utilitarian world, formulae for calculating public interest would be simple, but this is not descriptive of the real political world, for several specific reasons-
Chief among those reasons is Madisonian democracy's call for majoritarian rule and the preservation of minority
rights- Because of this unique facet of American democracy, identifying the public interest is difficult-
Evidence for this contention can be found in an example from
Congressional research. Fiorina (1977) and Mayhew (1974)
have suggested that members of Congress typically place a great deal of importance, therefore time and resources, on
getting re-elected. Successful re-election bids require
political and financial support from the Congressional
member's home district- Those legislative activities which
garner the strongest and largest support are those which
58 benefit the residents of the district, or at least those residents with political and financial clout.
The question of the larger public interest arises when we consider that if every member of Congress were primarily concerned with re-election, and thereby primarily concerned with district interest, then the aggregate "public interest," would still, insofar as it could be defined, be neglected. For example, legislation to preserve the natural resources of redwood forests may have great public interest
in California, Oregon, and Washington, but would have very
little significance to Florida, Georgia, and Alabama.
Perhaps concepts of the public interest hinge much more on
perspective than on geography or utility- Those who live in
Florida, Georgia and Alabama may not see the national public
interest served by legislation to protect redwood forests,
yet it is present- Redwood forests of California provide
the nation with a contribution to global photosynthesis, a
source of beauty to be visited and admired, and other environmental benefits to our delicately balanced ecological
system.
A clearer definition of the public interest seems more possible from specific perspectives- The perspective-bound nature of public interest concepts can also be used to discuss situations in which the national public interest is not so easily identified, if there is a national public
interest at all. In cases where the public interest is not
59 readily defined, it is relatively easy to criticize the public interest concept on the grounds that most legislators disguise a policy's "real" intent to benefit a particular group through the vague rhetoric of a policy apparently meant to regulate in the public interest- The debate about public interest might take two roads of argumentation, one being that public policy is aimed to benefit the few, and
the other that through the plural influences of various groups the public interest will be served-
There are some agents of the public interest,
regardless of possible self-interest, who continually
advocate policy in the "best interest of the public."
Mitnick (1980: 91) contends that "As long as agents exist
to believe in and act for the public interest, construction
of public interest theories should be feasible." Berry
(1977) provides an elaborate analysis of public interest
group characteristics in which he describes groups which may
not, in reality, exist- One of Berry's characteristics
implies a sense of altruism which may not fit every group
that seeks the public interest- But, he argues, as long as
public interest groups act as fiduciary agents, they are in
fact acting in the public interest. Of course, there is a
serious flaw in such a contention in that public interest
groups must somehow understand the definition of the public
interest that is most representative.
60 Problems surrounding the construction of public interest interpretations made by public officials, and problems surrounding the construction of theories of public interest made by researchers continue to arise- Bernstein
(1955: 154) studied and discussed the job of independent regulatory commissions to represent the public interest, and suggested that "Usually the public interest is conceived as a balancing by a commission of the interests involved in regulations." Bernstein is implicitly suggesting that the public interest is defined by competing interest groups who are most concerned with regulatory outcomes. These groups may or may not be representative of the public interest; however, Bernstein hopes that "the commission will be guided
by its legislative mandate" (1955: 154), which presumably mandates guardianship of the public interest. Although he
recognizes that the enabling legislation of independent regulatory commissions is more often than not extremely general and weak in its ability to guide specific policy goals, the hope remains that independent regulatory commissions will promote the public interest best by leaving the direct political influence of the executive branch
behind as its "independent" character is promoted. The implication that the "politics" mixed with administration is
the policy problem culprit, at those times when the public interest is not served, is an erroneous assumption. As public policy administration literature has recently
61 explained, the political nature of administration cannot and should not be wholly removed. The independence of
regulatory commissions, when "independence" is equated with
"apolitical," does not guarantee that the public interest will be served-
As suggested by the inconsistencies in the literature reviewed above, there is a distinctive debate within the
field concerning theories of the public interest. Some of
the literature seeks to categorize types of public interests
(Sorauf, 1957; Schubert, 1960; and Cochran, 1974). Schubert
(1960) identified the "rationalist," the "idealist," and the
"•"ealist." The "rationalist" category refers to public interest as acted upon by the representatives of the majority of the public- The name of the "rationalist" category implies that through rational thinking a majoritarian public interest will be discovered- Schubert's
"rationalist" category is complementary to Bernstein's unrealistic hope for legislative mandates to protect the interests of the public through representation. It also suggests that members of Congress, as representatives of the public, always behave according to their perceptions of the wishes of the majority of their constituents, once again assuming that the majority is the "public."
The "idealist" category describes the public interest in terms of the morality of decision-makers as they determine the best choices for society. This category
62 implies that members of Congress, in Pitkin's (1967) terms, act as trustees of the public interest, trustees in the sense that members of Congress may not act in accordance with constituent demands if such action appears to be harmful. Members of Congress, in this view, may act as trustees in certain situations regardless of the effect on their re—election.
Finally, in the "realist" category the public interest is determined through the mediation of conflict between an aggregation of competing interests which is smaller than the public, but which nonetheless is sufficiently diverse that its conflict will yield the interest of the public. The
"realist" category adequately describes the public interest concept of Bernstein's independent regulatory commission.
In addition to the economic regulatory theories outlined by Mitnick, James Q. Wilson (1974) provides an argument which he claims rejects both the public and private interest concepts- Wilson (1974: 137) sought to explain
"the circumstances under which regulation becomes politically possible, the pattern of regulation that is likely to emerge from a given political context, and the forces that will influence how a regulatory agency does its job." Wilson's attempt to introduce a new element to the discussion of interest-protected regulations fails. He introduces his "interest" concept by suggesting that costs and benefits of regulation are distributed among society in a variety of ways, and constructs four categories for distribution of costs (cited in Reagan, 1987: 60):
1. Majoritarian politics: most of society is expected to benefit, and most of society is expected to pay. The benefits are broadly distributed on both sides, as with the Social Security program.
2. Interest group politics: both the costs and the benefits are narrowly concentrated, with the general public having a sufficiently small stake so that it lets the opposing interest groups fight it out. Shipping regulation, which is largely a tight little world of steamship lines and major shippers, provides an example.
3- Client politics: here the benefits go to a small group, but the costs are widely distributed- The Civil Aeronautics Board illustrated this category to the extent that the CAB protected the airlines from competition and let them charge higher than competitive prices to the traveling public. Various agricultural price support programs would appear to fit this category very well, also.
4- Entrepreneurial politics: in this case, one finds widely distributed benefits, the costs of which are born by a narrow group. Much of the recent health and safety and environmental regulatory programs fit this model rather closely-
Wilson's model provides an understanding of the distributive nature of regulatory policy- However, there are significant deficiencies in his model, some of which are similar to those present in Theodore Lowi's classification of policy types. Another criticism of Wilson's model is found in his "interest group politics" category. This category poses a debate that reaches to a theoretical question concerning the struggle for political power in government. Wilson states that the outcome of the struggle to. distribute costs and benefits is determined by interest
64 groups vying for control of particular policy decisions.
Essentially Wilson continues to describe interests, but merely under a different kind of discussion of economic regulations-
Within Mitnick's subcategory of public interest protective regulations, there are several distinctive sub- subcategories of public interest theories- Even with this elaborate theoretic literary heritage, the burning question
remains: What is the proper role of government within society? If, as the economic regulation theorists suggest,
regulatory policy is defined in terms of economics, then
the market works in the interest of private enterprise, and
government only attempts to smooth the dysfunctions of the market for the public interest- Therefore, the boundary
between the private sector and the public sector can be seen
as shifting to the benefit of the private sector. However,
if the economic regulatory theorists' assessment of the
role of government is an incomplete one, then those
emphasizing the social consequences of regulation may
provide a more complete description of regulatory reality.
Unfortunately, the theories concerning social
regulations are much more difficult to articulate than the more parsimonious and symetrical economic ones. On the other hand to describe all regulatory activity in terms of economics is reductionist (Cushman 1941; Wilson 1974;
Mitnick 1980; and Thayer 1984). Thayer (1984: 73),
65 discussing social consequences of deregulation, suggests that "...social regulation of health and safety standards cannot be effective (or can become effective only at very high costs) unless it is accompanied by economic regulation; in an environment of all-out competition, social regulation cannot work well."
The suggestion that all regulations are economically motivated rests on the reductionst assumption that the nature of humanity is only instrumentally rational (seeking
to maximize benefits and minimize costs), and that humans
are only economically motivated. In this view, the way for government to ensure that the public interest is served in
air and water pollution policy, for instance, is to establish economic incentives for corporations not to
pollute. Political economists of this persuasion are essentially imposing a questionable fact/value dichotomy
when endeavoring to identify a solid economic character to
the proper role of government in regulatory affairs- If the
proper role of government as regulator is merely to smooth out the dysfunctions of a market society based purely on economics, then that role has been reduced to "facts" manipulated within the context of a value neutral free- market, while giving little attention to other "values."
Economics is then factual, rational, and empirical, and values, such as air safety, can only be defined in economic terms, if indeed they are worthy of notice at all in this
66 Positivist market—dominated worldview. Some scholars argue that effective regulatory policy intent and origin must be socially motivated (Lilley and Miller 1977; Derthick and
Quirk 1985; Ripley and Franklin 1986; and Reagan 1987).
Social Regulatory Theory
Administrative practice and scholarly thinking about social regulations, as things different from economic regulations, typically focus on the health and safety of the public, but an even wider perspective on regulations may
be necessary. Nader and Nader (1985: 142) describe their approach to analyzing regulatory activity as "holistic:"
Our examination of specific examples of regulation in government, business, and science in the United States shows that we are not dealing with a homogeneous set of materials- -..{W}-e attempt to apply to this problem an anthropological approach, which identifies clearly the arrangement of parts in a society and their interactions — an approach that is sometimes called holistic -
The typical focus on the health and safety of the public, is accompanied by interest in regulation of social, civil and cultural norms, such as regulation of marriage contracts or public behavior, most of which have remained
local policy matters- But some, such as abortion, have been sources of enormous political tension at all levels of government- At face value, social regulations appear to be identical to the public interest segment of economic regulatory theory- Some scholars say otherwise-
67 The new style social regulation affects the conditions under which goods and services are produced and the physical characteristics of products that are manufactured..-and also extends to far more industries and ultimately affects far more consumers than the old style ^economic} regulations, which tend to be confined to specific sectors- (Lilley and Miller, 1977: 54)
They tend toward horizontal and away from vertical
regulation.
The distinction between economic and social regulations
is characterized differently by Ripley and Franklin (1986:
74). "Competitive regulatory policies and programs limit
the provision of specific goods and services to only one or
a few designated deliverers chosen from a larger number of
potential or actual competitors." An example of competitive and hence economic regulatory behavior is the CAB's
limitation on the number of certificated routes to only a
few airlines- Protective regulatory policies and hence social regulations, are distinguished from competitive regulatory policies on the grounds that the former "are designed to protect the public by setting the conditions under which various private activities can occur" (Ripley and Franklin, 1986: 76)-
Michael Reagan (1987: 36) suggests that "Social regulation can generally be differentiated from economic regulation by the former's concern with harm to our physical
(and sometimes moral and aesthetic) well-being, rather than to our wallets." Reagan describes such things as safety at home or on the road, safety in the workplace, health
68 hazards, water—related health hazards, air pollution health hazards, and nuclear power safety, as examples of social regulations- He also offers three basic distinctions between economic regulations and social regulations: 1)
"that an increase in competition cannot remove the need for social regulation"; 2) that the negative effects are felt by third parties, not producers nor direct purchasers; and 3) that "---producers can ignore byproduct consequences of their operation (e.g., air and water pollution), and the costs of fixing up unless the government steps in"
(1987: 90).
In the case of airline deregulation, legislative intent was clearly one of economics- The policy goal of the
Airline Deregulation Act, according to its preamble (1978:
1705), was "to amend the Federal Aviation Act of 1958, to encourage, develop, and attain an air transportation system which relies on competitive market forces to determine the quality, variety, and price of air service, and for other
purposes-" To this end deregulatory reality appears to be
consistent with economic theory; however, the economic
intent of the Airline Deregulation Act and the outcome ten
years after its implementation are not the same in social
terms. Ten years after the Airline Deregulation Act was
implemented it appears that air safety has been compromised
by the economic goal of competition- It will be shown later
69 that air safety can be added to Reagan's list of social regulatory concerns.
The addition of the economic/social distinction described by Derthick and Quirk (1985), Lilley and Miller
(1977), Ripley and Franklin (1986), and Reagan (1987), allows the proposition that "the public interest" is not secured only by economic regulation- According to Reagan's definition of social regulations, the public interest is the justification for all examples of social regulations- Yet, the debate over economic and social regulations rages on, and there is little consensus as to the applicability of the distinction between regulatory policies which are economic and regulatory policies which are social.
Political Processes and Behaviors
It is necessary to discuss theories of the regulatory policy—making process separately from a discussion of the theories of regulatory origin- This is not to imply that in reality policy theory and origin are separated from process, but that the regulatory literature has often neglected the importance of political processes- The importance of process is revealed by the uniqueness of the ongoing nature of regulations- Beyond the theoretical justifications for regulations, the stages of the ongoing process offer opportunities for policy change and policy decay. Such opportunities arise as part of the need for implementation
70 of policy to be defined, modified, or changed either to make policy more viable or to insure that policy implementation is not carried out depending on the politics of both policy making and policy implementation-
The opportunities for change or decay are present in other types of policy besides regulatory policies, but critical analyses of processes are lacking in specific regulatory and deregulatory policy cases studies.
Essentially, it is the behavior or lack of behavior of interest groups, the executive, legislators and agencies
that create the opportunities for policy modification in the process of regulation and deregulation. As discussed
previously, the behavior of interest groups associated with airline deregulation seems to have had little influence on
policy change or decay, at least in the pre—implementation stages. By contrast, the executive, legislative, and agency
behaviors through the policy process stages seemed to have
had significant impact on policy change through the early
years of deregulation and, perhaps, in the later years as well- Within an analysis of legislative and administrative
process and behavior it is necessary to discuss the stages of the policy-making process and the types of behavior
associated, or even disassociated, with those stages.
71 Legislative Regulatory Processgc^
Jones (1975) describes the policy-making process in
terms of stages through which policy issues travel: agenda-
setting, policy formulation, policy legitimation, policy
implementation, and policy evaluation- The realities of
policy, however, rarely fit neatly into a process model.
The paradox within the American democratic context creates a
tension for policy processes as well- Likewise, the
fact/value dichotomy can confuse and distort the results of
researchers' policy analyses- Lindbiom (1980: 12)
comments:
In short, a deep conflict runs through common attitudes toward policy making- On the one hand, people want policy to be informed and well analyzed- On the other hand, they want policy making too be democratic, hence necessarily political- In slightly different words, on the one hand they want policy making to be more scientific; on the other, they want it to remain in the world of politics-
In addition, the nature of legislative behavior makes
regulatory policy—making all the more political- At the
heart of legislative behavior, re—election plays a critical role in the legislative regulatory process- Just as re election plays a role in legislative definitions of the public interest, legislative regulatory behavior is also influenced by re—election- Congressional scholars such as
Mayhew (1974), Fiorina (1977), and Fenno (1966) have suggested that bids for re—election influence not only the
Congressional member's campaign strategies, but her policy decisions as well. Members who sit in seats that are not
72 necessarily safe, meaning districts where the Congressional election could be won by the incumbent or just as easily won by a challenger, are more readily influenced by the political winds of their home district (Fiorina, 1977).
Fenno (1979) discovered that members spend large portions of their resources on traveling back to their home districts.
This home district mentality lends itself to policy-making oriented to the local rather than the national level. The
implications of this type of legislative behavior on airline deregulatory policy raise several questions. All
states have airports, and all states have airlines services available. But, not all states have major, high—density air
traffic (hub) airports- Legislators, according to the unsafe seat argument, should be concerned about how deregulation would effect their home district airports-
Major airlines operating in the deregulated environment seizeo services to smaller communities in lieu of the
larger, more lucrative hub airports- Congressional districts with small populations, and less lucrative airline markets, are either left without service or are serviced by
regional or commuter airlines- From this perspective, would certain members of Congress approve deregulation of the airline industry?
Another question raised by analysis of legislative regulatory behavior is whether Congressional scholars are incorrect in their assessment of incumbent behavior- If they are, then members of Congress may participate in airline deregulation policy from the perspective of national policy interests- But, is there a national policy interest?
It is difficult to answer these persistent questions; it may be found that actual legislative behavior in airline deregulatory policy was so focused on the economic aspects of airline deregulation that little attention was paid to district level effects other than the immediate decrease in airline ticket prices as a factor of open competition.
However, there are several district—level effects which over the course of implementation seem to have appeared, such as higher regional and commuter air fares, older and smaller aircraft, and the added risk of less safe air transportation- In order more fully to identify whether members of Congress recognized the potential for these other district-level effects, it will be necessary to examine legislative intent in terms of definitions of district-level interests-
With the understanding that the policy-making process is one of politics and not merely one of science, a review of political behavior not only of legislators, but also of implementors within administrative agencies, is appropriate.
Regulatory Agency Behavior: t ife Cycle Theory
There are three basic types of actors participating in the process: agenda setters and policy initiators,
74 legislators, and implementors. In the case of airline deregulation, the agenda setters and policy initiators were essentially members of consumer interest groups, members of
Congress, administrative officials, and the President- The legislative actors were of course Congress. And the implementors were those within the CAB who were charged with dismantling their own agency-
Of particular interest to the issue of airline deregulation is the administrative behavior of regulatory agencies within the process- Bernstein (1955) developed a regulatory theory of agency behavior that resembles the pattern of evolution- Bernstein's life cycle theory suggests that regulatory agencies are created, grow, mature, and age much-like humans. The first stage, gestation, may take twenty years or more, as mounting stress over a particular problem builds (Bernstein, 1955: 74). The mounting stress or conflict is apparent to Congress as members seek to mediate, and then to legislate solutions.
The gestation period contains the agenda setting and policy initiation stage of the policy-making process model. The legislation arising from the gestation period authorizes a new regulatory agency but rarely provides it with a clear mandate for reaching specific policy goals. As several scholars have pointed out, the failure of policy implementation can be directly linked to the ambiguity within the gestation period, which later requires seemingly
75 autonomous implementors to interpret legislative intent
(Pressman and Wildavsky 1979; Bardach 1977; Sabatier and
Mazmanian 1983; and Lipsky 1980; but other scholars have suggested that the emphasis on implementation failure as a result of vague legislative mandates is erroneous; see
Palumbo, 1987; Fox, 1987; and Yanow, 1937). They argue that such an emphasis fortuitously employs the fact/value dichotomy, which is not accurate for explaining the political paradoxes of policy implementation)-
In the case of airline deregulation, it may not be so much a matter of vague policy mandates as much as a matter of legislative activity neglecting safety consideration for a more detailed and narrowly focused goal of economic deregulation- Given the detail of the Airline Deregulation
Act of 1978, it appears that implementors had little room
for interpretation either in the direction of positive
safety protections, or in changing economic deregulation.
The second period of Bernstein's life cycle theory is agency youth- The major characteristic of this period is the inspiration of the agency officials to accomplish policy goals- Downs (1966) describes the agency officials during the youth phase as zealots and advocates. As the agencies'
relevant political environment begins to narrow and the policy issues begin to loose public interest, the third phase of the life cycle begins to appear. Losing vitality, the agency moves into maturity. During this stage, agency
76 o'f'ficials become more concerned with agency survival than with pursuing policy goals- This is also the stage at which agency officials often begin strongly to identify with the industry they regulate- Officials engage in the revolving door process of entering the private sector from public service, and the opportunity for agency capture is imminent- The fourth phase of the cycle is the period of agency stagnation: it is primarily concerned with maintaining the status quo while its budget is typically being cut- This stage is referred to by Bernstein as the old age phase- The old age phase implies that death will eventually occur; but in most if not all instances agencies simply fall into obscurity rather than death. Others find revitalization through new goals or new legislation- Downs
(1966: 22) disputes this, and argues, in fact, that virtually no agencies die, they only fade away.
Although the explanatory paradigm of regulatory agency behavior has been longstanding as a key to the understanding of regulation, it does little to explain deregulatory behavior except perhaps to suggest that deregulation may be the ultimate "death" of an agency. However, Derthick and
Quirk (1985) suggest that in the case of airlines, banking and communications, it was the agency heads themselves which sought regulatory reforms- Typically agency heads seek ways to perpetuate their agencies. The Airline Deregulation
^ct of 1978 carried with it a piece of sunset legislation
77 which eventually forced the dismantling of the CAB. In other words, the CAB itself encouraged its own death through participation in deregulation policy-making which helped promote sunset legislation. Derthick and Quirk consider the use of the dismantling of the CAB by policy researchers as an example of the ultimate life cycle theory to be erroneous- They contend that the CAB's fate was sealed from within the organization by its chairman, Alfred Kahn-
The Derthick and Quirk line of argumentation raises another issue of political behavior, the institutional
relationship between Congress and the executive branch. As
Shepsle (1978: 236) puts it.
My basic point is that to appreciate why regulators choose to deregulate, it is important to understand the institutional regime in which they and their agencies are embedded. An institutional regime is a structure of incentives against which practical politicians — legislators, bureau chiefs, executives, etc...— adjust their actions- It is the system of channels through which forces converge and prevalent ideas flow- At the center of this institutional regime is Congress and its committees, as lawmakers, delegators of statutory authority, and monitors of agency discretionary behavior to answer the question of why the regulators whose to deregulate, one must examine what changed in the structure of Congress or in the preferences of key legislators.
Political actors involved in regulatory policy decisions typically include Congressional committee members,
a clientele or interest group, and a government agency-
By the time deregulation had become an issue for the
legislative agenda, it had been helped along by several consecutive Presidents as part of the executive policy
78 agenda- Chairman of the CAB, Alfred Kahn, as a political actor, participated in promoting deregulation long before
Congress actually passed the Airline Deregulation Act of
1978- This presidential appointment allowed the idea of deregulation to be tested prior to formal action, thus providing Congress with some decision—making certainty.
Legislative certainty, no matter how minimal, is worthy of notice by members of Congress. Likewise, the leanings of general popular opinion, as well as elite decision-makers for many years, was a move toward limiting the size of the federal government particularly in terms of economic intervention of government regulatory agencies, such as the
CAB. As deregulatory policy became politically fashionable, both Congress and the President embraced its economic concepts.
Regulatory Reform Deregulation
There are two specific charges made against the implementation of purely economic regulatory policies, and of social regulations. First, economic regulatory policy makers have been criticized for creating unfavorable economic conditions for private sector operations. The second charge is interrelated to the first, that is, social regulations are now appearing to be too intrusive into private sector operations. This criticism is often applied to cases where government intervenes into businesses, for
79 example. Occupational Health and Safety Administration
(OSHA) regulations- On the one hand, OSHA regulations protect private individuals, while, on the other hand, limiting the economic growth of business.
Gerston, Fraleigh, and Schwab (1938) suggest two other fundamental justifications for government social regulations, both being responses to market failures. The first justification put forth by these scholars is concerned with the "externalities," or the by—product costs of production which are transferred to the public. Gerston,
Fraleigh, and Schwab (1988: 31) provide the following example: If a widget factory dumps waste into a river, for example, everyone is hurt by the loss of clean water. The cleanup costs of the river should be borne by the producers and consumers of widget, but they are not; the cost is said to be external to production-
Another example can be found in Meier. Meier (1935) discusses two basic regulatory policy goals of efficiency and equity, goals that can be interpreted within the economic/social framework, although each of them carries economic regulatory policy goals- Efficiency, as described by Meier (1935: 270), can not be absolutely complete in that regulatory policy actors can not perfectly allocate public resources. Thus, Meier concludes, there are several market failings which regulations are intended to relieve: lack of competition, economic externalities of consumption,
30 insufficient consumer information, and the diminishing value of public goods-
Likewise, Meier's equity policy goals also redress particular market failings: the lack of equal political and economic power, unacceptable income distributions, and high uncertainty- The two regulatory policy goals of efficiency and equity are seldom without tension between one another, particularly if the equity goal is defined as something such as equal access to health care, or equal access to education -
The tension between efficiency and equity rests in the fact that ensuring equality is rarely economically efficient- For example, providing equal access to health care may mean that public resources will have to be allocated in ways that may not appear to be economically feasible- Efficient allocations may mean excluding those people who are unable to pay for health care; efficiency may require investing resources in ventures that will provide a high return on investment rather than more health care delivery.
The pressure on government to protect certain types of interests is reflected in discussions of how certain types of policy deliver benefits to certain groups- However, scholarly efforts to catalogue such types have been less than successful-
81 Regardless of the lack of parsimonious typologies of policy, it is nonetheless imperative to an understanding of impacts of deregulation to identify the root of efforts to deregulate the airline industry- The drive to deregulate economic regulations stem from concerns for the size of the federal government- Meier (1935: 278) suggests that regulations have been ineffective in accomplishing their stated goals, that regulations costs business unnecessarily, and that regulations are the cause of production delays.
These concerns have been adopted by both Democrats and
Republicans: President Carter was responsible for
beginning much of the process of deregulation of various
industries (oil and gas, banking, and transportation, for
example) that Congressional Republicans and President Reagan
have also enthusiastically supported.
Meier (1985: 276) points to the lack of responsiveness of regulatory agencies to the public, the ultimate
beneficiaries, as a significant political shortcoming, and
he is joined by scholars such as Huntington (1952),
Bernstein (1955), Stigler (1971), and Posner (1971), all of whom emphasize the tendency of regulatory agencies to
respond to regulated industries rather than the public-
Other scholars have discussed the nature and practice
of the bureaucratic state within the policy making process.
Redford (1969) described a form of democratic morality in
which the individual's rights are primary, and there is
82 equal access to, participation in, government decision making- Large bureaucratic organizations are structurally and functionally hostile to this form of democratic morality- Redford's democratic morality insists upon high regard for liberal individualism, and the positive use of government through the elected representative system only.
The extent to which this lofty morality can be obtained is limited by the progressive and intrusive use of large bureaucratic processes and practices- For example, the informal rule making process is often unfair to the private individual, while favoring the business class (Redford,
1969). Similarly, large bureaucratic organizations also can contribute to the delay which often accompanies certain types of regulatory policies as Stone (1982: 212) demonstrated in the case of the Food and Drug
Administration- Policy delay within the airline industry is similar to the limitations of oversight in that safety inspections, fines, and halting flight operations often involve large amounts of red tape and time when, all the while, the public is flying on potentially unsafe airlines-
Along with those who have identified the failings of regulations, other scholars have discussed the shortcomings of deregulation (Tolchin and Tolchin, 1983; Derthick and
Quirk, 1985; Gerston, Fraleigh, and Schwab, 1988; Reagan,
1988), among which is the lack of public safety protection-
In addition deregulation often creates cuts in services as
83 a response to increased competition. The operating environment within deregulated industries can also be unstable when corporate mergers and antitrust practices begin to run rampant. Analysis of the Airline Deregulation
Act of 1978 provides evidence for all of these shortcomings.
Although there is a variety of justifications for supporting airline deregulation, the core issue remains one of normative assumptions about the proper role of government within the private sector- If government's role is to be one of limited intervention, then deregulation is proper-
However, if the implementation efforts of airline deregulation take on consequences that reach beyond economics, limited government may not be proper-
As suggested thus far, it appears that there are a few deregulatory theories which recognize a definition of the public interest that extends beyond merely economic concerns- Airline deregulation seems to be emblematic of other deregulatory policy areas- Since the Lowi and Hayes typologies fail to deal with the special nature of regulatory policies, they also fail to explain deregulatory policy- Moreover, the scholars who do deal specifically with economic regulations are insufficiently sensitive to the social consequences of regulations- To bridge the gap in the literature, it is necessary to recognize the
(jniqueness of deregulation as a political activity, and fully to develop an understanding of the consequences of
84 such policy. This research will seek to place a case study of airline deregulation within the proper political and theoretical contexts, while presenting an analysis of the policy-making process surrounding the Airline Deregulation
Act of 1978-
Summarv. Conclusions, and Lingering Questions
Several broad issues have been considered here including: 1) the democratic context in relation to the nature of the proper role of government, 2) the contributions and limitations made by past literature toward the goal of explaining policy-making, and 3) the behavior of policy participants, within the larger political arena and within smaller plural subgroups-
A policy analysis of airline deregulation requires a systematic examination of the proper role of government.
For the research question at hand, the proper role of government may not be so much a matter of solely protecting economic interest through deregulation, but rather to promote the public interest of greater safety within the airline industry. Any meaningful definition of the public interest must include more than solely economic considerations-
The paradoxes within the American democratic context create tension for government when intervention is exercised through economic as well as social regulations. Americans
85 typically want specific government protections including intervention through regulations, but many Americans, holding to liberal individualism, are also not willing to allow government intervention into some private matters.
The remaining questions concern matters of degree, how much government intervention is too much? And, how can government define and protect the public interest in terms of social and economic regulations.
In the case of airline deregulation many policy—makers held that there was a public interest concept surrounding the promotion of competition through deregulating the industry. It is relevant to suggest that even though economic regulations have been perceived as different from social regulations, the outcomes of economic deregulation of airlines have social consequences-
Analysis of political processes and behaviors indicates that the policy-making process is more than particularized stages, legislative intent and motivation, as well as administrative interpretation are key elements to subgovernment policy-making. Deregulation provides the opportunity for subgovernment political actors to advance a larger policy goal of reducing the size and intervention of the federal government- President Carter played an indirect role in subgovernment politics by appointing a pro— deregulatory chairman to the CAB- Alfred Kahn played a direct role by rubber—stamping all types of airline
86 requests, from route modifications to new airline certifications- The aviation subcommittee played a subgovernment role by recommending Senator Kennedy's deregulation plan to the House and Senate. Finally, the role which airlines played as an interest group seemed to have been minimal because of the overriding goal of limiting government.
This research rests on three key issues. The fact that airlines have been involved in fatal air accidents in the
last ten years and that those accidents have causes which seem to emanate from a deregulatory policy approach. It also appears that not only has deregulation had an effect on air safety, but that by opening particularly lucrative airport markets to greater competition, these markets have also been opened to extremely high levels of air traffic.
Finally, in academia as well as in the world of policy making, it has been typically assumed that economic regulation and economic deregulation, are a different category of regulations from social regulation and social deregulation- Simply put, economic regulations are concerned with the profit aspects of business operations; while, social regulations are concerned with social impacts of production- One contention of this research is that the distinction between economic and social regulations is not a hard and fast rule one. It seems to be apparent that economic deregulation has certain social consequences vyhich
87 extend beyond the scope of economics. Similarly, it is seems that policy—makers within Congress and among the majority of those who testified before the House
Subcommittee on Aviation, assumed that airline deregulation was a matter of economics pertain to the specific goal of greater competition.
Having considered the genre of literature concerning regulatory and deregulatory policies, it is evident that systematic inquiry which places deregulation in a framework adequately defining the specialness of deregulation as a policy type, and adequately measuring its effects, is an imperative part of any policy analysis of the Airline
Deregulation Act of 1978.
83 CHAPTER III
DATA AND METHODS
Introduction
The heart of this analysis is the attempt to discover whether airline deregulation has played a role in any apparent compromise of air safety during the ten years following deregulation implementation. With the advent of deregulation, economic uncertainty, new challenges of competition, and greater public demands placed many airlines in a position requiring them to seek significant changes in airline operations and management. A scenario can be created to model industry realities in which the larger, older airlines, in order to survive in the deregulatory environment, choose to cut costs by cutting corners. Cutting expensive corners might include cuts in personnel, including maintenance workers; cuts in flight crew training programs; operating cuts, such as lowering fuel consumption and encouraging pilots to overlook safety precautions in order to save time and money; flying older aircraft with fewer engine overhauls; and, scheduling crews to fly longer duty days.
In addition to such cost cutting scenarios of the larger airlines, smaller, upstart airlines took advantage of the absence of CAB route certification to begin commuter and regional operations- This created new challenges to safety
39 since these airlines often lacked both experience of management teams and flight crews-
Both the larger airlines and the commuter and upstart airlines placed greater burdens on the nation's air traffic control system as they began to add flights to major money- making airports. The increase in air traffic density around certain airports, coupled with the air traffic control crisis of the early 1980s, increased the risk of midair collision.
Several serious air crashes involving both major and commuter airlines, over the last 10 years, have spawned questions about the relationship between the impact of the
Airline Deregulation Act and these fatal accidents. This research will test several hypotheses to determine the nature of deregulation's effect on air safety. This
research seeks identification of the political intent of deregulatory policy-makers- It is reasonable to assume that deregulatory policy-makers could have foreseen the potential impacts of economic deregulation of the industry on safety, but that decision-makers failed to give the proper attention to possible safety consequences- In order to carry out this research, it is necessary to adopt a research plan. Such a plan requires a combined methodological approach.
A systematic analysis of the Airline Deregulation Act of 1978 requires adopting a research design plan that will,
to the greatest extent possible, establish a line of inquiry
90 which is conducive to appropriate scientific measurement o relevant data.
Hypotheses
Hx= In the 10 years following the passage and implementation of the Airline Deregulation Act of 1973, more air accidents can be attributed to variables that are related to deregulation than is true of the causes of accidents in the decade preceding deregulation.
A systematic approach to testing this hypothesis requires analysis and manipulation of variables reflecting observations of events in time. These observations are of fatal airline accidents which have occurred over the last two decades. Observations must be made of airline accidents prior to the passage of airline deregulation and of airline accidents following the legislation. If, as hypothesized, airline deregulation is related to the accidents, the causes of accidents must receive special attention. It is imperative to determine the nature of relationships between deregulation, the industry responses, and the causes of accidents. Because of the difficulty in obtaining documentation of private records of airline companies and because many company policies which might encourage less safe competitive practices are often vague suggestions rather than formalized company policy, it is necessary to draw inferences from other sources of evidence. If, as
91 hypothesized, deregulating the industry produced responses suggesting less safe competitive company practices, then evidence of unsafe practices should be apparent in the causes of air accidents.
*^2= In the ten years following the passage and implementation of the Airline Deregulation Act of 1973, air
^•"affic surrounding certain major airports has become
"dangerously" more congested, when compared to levels of air congestion in the decade preceding deregulation.
As deregulation opened the industry to greater competition the hub and spoke system developed. A few major
"hub" airports are markets for all the major airlines with connecting commuter airlines supporting small "spoke" airports. As the air traffic around the hub airport became more and more dense, air traffic control officials found that it was more and more difficult adequately to sequence and separate aircraft- Even though the accident rate for midair accidents near hub airports may not have risen exponentially since deregulation, higher levels of air traffic around hub airports increased the risk to the flying public for midair accidents-
H3= At the time the Airline Deregulation Act of 1973 was passed the policy-makers held to the purely econojnic theory of deregulatory policy, virtually ignoring the social impacts on safety, as measured by policy-makers' own statements in Congressional documents concerning the
92 direction of deregulatory policy as related to economic
issues rather than safety issues-
It is expected that evidence testing this hypothesis
will show that deregulatory policy-makers defined the
public interest in terms that did not include safety.
Either deregulatory policy-makers assumed that safety was
not an issue or they, consciously or subconsciously, took
the economic interests of greater competition to be of
higher priority than the social consequences of safety.
Methodology: The Triangulated Approach
The basic research approach to be taken by this
analysis is a triangulated approach- In order to identify
the unknown unit in an analysis, triangulation is used to
identify the intersection of two known units, and that
intersection should point to the location of the third and
previously unknown unit- For example, triangulation is used
in air navigation by measuring the distance an airplane is
from two known points, such as towns, and then drawing
intersecting lines on a map- That intersection is the
precise location of the airplane- Although the unknown of
the present research can not be identified quite so
precisely, by using two different types of methodological
measurement devices, it is hoped that the unknown element,
or relationship, can better be identified.
93 In this research, the unknown relationship is between the implementation of the Airline Deregulation Act of 1973 and the causes, since passage, of fatal airline accidents as reported by the National Transportation Safety Board
(NTSB). In order better to identify this relationship it is necessary, to establish one point on the triangle, to
discover the nature of legislative intent, as well as the
impact of legislation on the scope and nature of the airline
industry- In order to measure the relationship between
deregulation and airline accidents it is necessary to
analyze the relationship between accidents under regulation
and accidents subsequent to deregulation. Analysis of
legislative intent and its impact on the scope and nature of
the airline industry is best accomplished through a case
study approach. Interrupted time series analysis can best
measure the correlation between regulation and deregulation
accidents. After the quantitative analysis in Chapter IV,
a case study will be the subject of Chapter V. But a
discussion of methods^of case study analysis will be
presented first here-
Case Study Analysis
The first type of methodological approach to be used is
case study analysis of the intent of policy-makers. Case study analysis, according to Yin (1984), can be used in a
94 much broader sense than typically thought. Yin (1934: 23) provides a definition of case study analysis as follows:
A case study is an empirical inguirv that: ^investigates a contemporary phenomenon within its real-life context; when *the boundaries between phenomenon and context are not clearly evident; and in which ^multiple sources of evidence are used.
Accepting this definition, the use of case study analysis as a portion of the triangulated approach is appropriate- Similarly, the case study approach will help to provide information concerning the political context of
the Airline Deregulation Act of 1978- Case study analysis
is distinguished from other types of analysis by Eckstein
(1975: 31) in an example from psychology of the contrast between clinical studies and experimental studies- The analysis of the Airline Deregulation Act of 1978 fits this definition of case study as well. Eckstein (1975) holds
that clinical studies involve a small range of research such as an individual unit of analysis or at most a limited number. The typical experimental study adheres to a tightly constructed research design, while "the typical clinical study is much more open-ended and flexible at all stages"
(Eckstein, 1975: 81). Eckstein (1975) goes on to propose that clinical researchers seek to capture the unique essence of their subjects, and may use "hunches" to generalize about the individual unit.
Case study analysis is appropriate as a portion of the triangulated methodological approach used here better to
95 grasp the political intangibles of the deregulation policy context- Moreover, Yin (1984: 22) suggests that case study
analysis can be a research strategy by itself. In a larger sense, the research approach taken here is quite conducive
to case study as a "strategy."
In addition, case study analysis is an appropriate way
to show the uniqueness of airline deregulation. This uniqueness is basically threefold. First, a history of
federal activity made competition problematic- "The federal
licensing and inspections made it inevitable that the basic
operational elements of all airlines would be virtually
identical, thus giving passengers few reasons for choosing
one airline over another" (Thayer, 1965: 8)- Similarly,
the national airways along with radio—navigation equipment
and weather forecasting facilities were essentially
indications of the permanency of an air carrier system as a
service to the public. A second way in which the airline
industry is unique is found in the highly emotional public
response to the graphic displays in the media of airline crashes- Third, airline deregulation is among the first substantive areas of the deregulation movement to come to
fruition. Not only did Congress choose to deregulate the airline industry, they also passed sunset legislation to dismantle the CAB by 1983-
96 Congressional Hearing Data
Presuming that members of Congress take seriously their duty to protect the public interest, curiosity leads one to speculate about the legislative intent of deregulatory policy actors- Since it appears that there is debate over
the linkage between regulatory and deregulatory policy
types, questions arise as to the definition of public
interest made by legislators when discussing airline deregulation. Were members of Congress defining the public
interest only in economic terms? If so, did they neglect
the social consequences of deregulation?
To ascertain the intent of legislators, it is necessary
to dissect the structure and process of elite decision
making among the principal actors. Examination of
Congressional documents submitted by subcommittees dealing
with aviation will yield evidence that will be used to
describe the nature of questions raised by members of the
subcommittee, as well those raised in witness testimony-
This is accomplished by identifying the questions or _
statements that were made regarding an aspect of safety.
In hearings where the main topic of consideration was
safety, the researcher judged the content of the questions and statements as either implying a real concern for safety,
or implying another concern for economics- During congressional hearings, members of committees and
subcommittees explore policy alternatives, often
97 scrutinizing the positions of political opponents. Through
this question and answer process, the foundations of
legislative intent can be revealed. The type of questions
that are asked are also an indication of what elements of
the issue were important considerations to member decision
making. It is expected that members of Congress were much
Isss interested in the social consequences of deregulation,
and much more interested in the economic deregulation of
the industry in order to accomplish multiple goals of
limiting the size and intervention of the federal regulatory
system, and of encouraging the economic goal of greater
competition through deregulation.
Case Study Evidence
Beyond the attempt to hypothesize about the effects of
deregulation, it is essential also to provide real world
case evidence to further substantiate the findings of the
research. This will be accomplished through a summary of articles and reports obtained from a variety of sources.
Newspaper, magazine, and televised interview transcripts will be used to outline case history of the experiences of
U.S. airlines in a 10 year old deregulatory environment.
Time Series Analysis
Analysis of implementation of public policies is an
irea of study which seems conducive to certain types of
98 political science research techniques. No longer is it appropriate to consider implementation research as only applicable to policy evaluation after the fact- More broadly speaking, implementation studies also involve asking
research questions about legislative intent, bureaucratic
interpretation and discretion, inter— and intra-
institutional political struggles among the executive,
legislative, and judicial branches of government, and the
nature of the relationship and interests of those who govern
and those who are governed. In much the same way,
interrupted time series analysis is a research technique
which can be used as part of a more rigorous test of the
public impact of policy, the political development and
consequences of policy adoption, and in a somewhat limited
sense, time series analysis can provide the policy analyst
with evidence to predict future consequences of policy
alternatives.
Interrupted time series analysis has typically been
used to analyze how "large scale social or physical changes
affect aggregate indicators, such as how television
influences crime rates" (Straw, Fitzgerald, Cook, and
Thomas, 1982: 83). In other social science fields,
interrupted time series analysis has been used to
"investigate the effects of planned interventions in relatively small populations over relatively short periods
of time" (Straw et al- 1982: 83)-
99 Txme series analysis can be expressed by nonlagged and
lagged models- Nonlagged models concern the relationship of variables over time in which both the endogenous (the dependent variable whose values are explained by the model) and exogenous (the explanatory or independent variables whose values are determined outside the model at hand) variables are observed at the same point in time (Ostrom,
1979)- Ostrom provides the example of hypotheses concerning
the measure of current U-S- defense spending as related to current U-S-S-R- defense spending. On the other hand,
lagged models relate current endogenous variables to past values of the exogenous variable. Applied to Ostrom's
example, current U-S- defense spending would be related to
past U-S- defense spending plus current and past U.S.S.R.
defense spending-
The activity which the government undertakes in one year has a lagged effect on events in the successive year.
For example, the Civil Aeronautics Board (CAB) in 1969, participated in policy activity to approve or deny airline
requests for route modifications, market entry, and fare increases. These activities affected the airline operations in the subsequent years. In other words, the CAB regulated the economic aspects of the airline industry in the years
1969 to 1973- In those same years airlines were involved in fatal aircraft accidents- In the years following the passage of the Airline Deregulation Act of 1973, the
100 economic regulatory activity of the CAB essentially ceased,
and in those same years of deregulation, airlines were still
involved in fatal aircraft accidents- What is of importance
to this research is the comparison between accident causes
prior to deregulation and causes after deregulation. The
application of the time series analysis to the hypothesis
that government activity, or inactivity, is related to
airline accidents would necessitate a lagged time series
model in which CAB activity in the year prior to the
accident year would be analyzed with such dependent
variables as the total number of accidents for that year,
the primary causes of the accidents, and the contributing
causes of the accidents-
Data Collection
Time Frame of Accidents
Testing the strength of the relationship between deregulation and causes of aircraft accidents begins with data collection of aircraft accidents over the last two decades. The time frame for this research was selected for two major reasons- First, as of the beginning of this research effort in 1938, 10 years had elapsed since airline deregulation became policy-. Thus, the time period prior to deregulation is comparable to the equivalent time period following deregulations-
101 Criteria for Accident Inclusion
Several other criteria besides the date of accidents were used in data collection. Accidents, as opposed to incidents, are the only events selected. According to the
NTSB, "aircraft accident" means:
an occurrence associated with the operation of an aircraft which takes place between the time any person boards the aircraft with the intention of flight and all such persons have disembarked, and in which any person suffers death or serious injury, or in which the aircraft receives substantial damage- (49 CFR 830)
According to the NTSB, "fatal injury," and "substantial
damage" means:
any injury which results in death within 30 days of the accident- 'Substantial damage' means damage or failure which adversely affects the structural strength, performance, or flight characteristics of the aircraft, and which would normally require major repair or replacement of the affected component- Engine failure or damage limited to an engine if only one engine fails or is damaged, bent fairings or cowling, dented shin, small punctured holes in the skin or fabric, ground damage to rotor or propeller blades, and damage too landing gear, wheels, tires, flaps, engine accessories, brakes, or wingtips are not considered 'substantial damage' for the purpose of this part- (49 CFR 330)
All accidents had to have involved commercial air travel operations- Commercial air travel operations are defined by
the FAA, and by this research, as "for hire air
transportation services"; private and military operations
were excluded from data collection because private operations are not for hire and therefore not related to
deregulation, and military operations fall under the ultimate jurisdiction of the Pentagon, not the CAB, FAA, or
102 NTSB. All accidents used in data collection had to have
involved United Sates domestic airlines and had to have
occurred in Continental U-S., Alaska or Hawaii. The
accidents included in the data had to have resulted in
fatalities of human passengers- Therefore, only passenger
airline operations, as opposed to all cargo flights, were
used.
The FAA and this research distinguish between commuter
air carrier operations and major air carrier operations, in
that commuter airlines, under 14 CFR Part 135, are defined
as
The carriage in air commerce of persons or property for compensation or hire as a commercial operator (not an air carrier) in aircraft having a maximum seating capacity of less than 20 passengers or a maximum payload capacity of less than 6,000 pounds, or the carriage of persons or property in common carriage operations solely between points entirely within any state of the U.S. in aircraft having a maximum seating capacity of 30 seats ar less or a maximum payload capacity of 7,500 pounds or less.
Similarly, major airlines are defined as operations engaging
in interstate or overseas air transportation, carrying more
than 30 passengers or a maximum payload capacity of more
than 7,500 pounds-
These criteria for including accidents in this research are justified on several grounds. The Airline Deregulation
Act of 1978 covers only U-S- commercial airline operations.
The safety of air transportation is relevant only to passengers, not cargo. Although the Airline Deregulation
Act of 1973 could cover U.S. international operations,
103 systematic reporting of NTSB accident reports xs nonexistent when aircraft accidents occur in other countries, because the NTSB is not always permitted to investigate accidents in other countries- Although safety can be measured in terms of non-fatal accidents, the number of non-fatal "accidents"
as opposed to "incidents" is very small. Similarly, the seriousness of fatal crashes is the highest measure of air
safety. Aircraft "accidents" are used for data collection
because of systematic reporting by the NTSB of all
accidents. Although the NTSB can investigate any "incident"
they are not required to investigate all incidents.
However, the NTSB is required to investigate and report on all accidents.
Causes
The data pertaining to causes were collected based on
NTSB investigated and reported causes of accidents. In accidents where the NTSB were unable to determine a direct or contributing cause, the finding of "unknown" was used.
In accidents where the cause stemmed from someone other than any airline crew member or airline official, such as a collision involving fault on the part of disassociated persons, the term "other" was used. Accidents involving weather as a cause or as a contributing cause, are coded as
"weather." It should be noted that the NTSB most often reported "weather" causes in conjunction with other causes,
104 such as pilot error. Such findings are justified on the grounds that when severe weather is known to be present, the pilot in command should not jeopardize the safety of the flight by flying into severe weather conditions- Causes of
"unknown," "other," and "weather" seem to be causes least related to deregulation-
Findings of "structural failure" as a cause, refer to any failure of the aircraft itself, such as, the wings,
flaps, engine cowlings, fuselage, or empennage. (Note: engine failure specifically was incorporated under the
finding of "maintenance error"). The NTSB holds "design" as a cause when any aeronautically engineered system has
failed- In accidents where "communication" was cited as a cause, this research identified external cockpit
communication as the cause, for example, communication
between the pilots and air traffic control officials were so
designated-
According to the Federal Aviation Regulation governing aircraft operations, the safety of an aircraft is the ultimate responsibility of the pilot- Similarly, structural weaknesses can be the result of stress placed on the aircraft by extreme movements of the control systems made by pilots- This category, "pilot error," can technically be found for almost all accidents, even those involving structural failure, because a pilot is held responsible for detecting structural weakness on the ground during pre-
105 flight testing- Because the "pilot error" finding can be cited in virtually all cases, intervening causes and
contributing causes, as found by the NSTB, are also included
in the data collection for this research-
A cause similar to "pilot error" is "cockpit
management." In accidents where the flight crew failed to
carry out their assigned duties, or to communicate vital
information, cockpit communication was found to be the
cause. This category of causes may play a role in
accidents involving companies with poor labor relations.
For example, in companies where striking pilots have
returned to the cockpit to fly with pilots who crossed the
striking picket lines, there may be hostilities to the point
that safe cockpit operations are jeopardized.
In some cases, the NTSB may hold air traffic control
(ATC) officials responsible for the causes of accidents.
Such accidents may include circumstances in which ATC failed to provide adequate margins of safety for aircraft operations in traffic. The NTSB also may cite a cause of an accident as being related to FAA inspection of airline operations, and intervention into unsafe practices. Unsafe practices in which the FAA should intervene might included using outdated equipment or nonstandard or irregular flight procedures. The findings of "structural failure," "design,"
"communication," "pilot error," "cockpit management," "ATC,"
106 and the "FAA," seem to be a step closer to bexng related to effects of deregulation.
"Maintenance error" was found as a cause in accidents where improper maintenance preparations were made. After
deregulation, airlines tended to move toward cost cutting management styles in order to be more competitive in a new
industry environment; therefore, the maintenance division is
an easy place to cut costs. Maintenance is an area which
passengers do not readily notice efforts to scale down
expenditures. Similarly, airlines may also cut corners on
pilot training and experience. This cause is related to the
principle of supply and demand, and it has a snowball
effect: airlines may hire pilots with less amounts of flying
time, in order to get cockpits filled, so that more company
airplanes can be flown, in order that the company might be more competitive at hub airports. Finally, the cause of
"company management" consists of any airline practice that
threatens the safety of a flight. For example, this cause would be cited if an airline company exercised poor pilot scheduling procedures in order to maximize flying hours per
pilot- The causes of "maintenance error," "training," and
"company management" are causes which are closely associated with deregulation- Figure 3.1 depicts the causes and their definitions-
The use of "causes" as an indication of a partial correlatign between airline accidents and deregulation seems
107 to be reasonably quantifiable. In other words, it is possible to place numerical values on the number and type of causes for any given accident. Although the NTSB uses systematic means in their investigations, determining causes
is nonetheless an inexact science. The official determination of the causes of accidents is made by the
NTSB, and the NTSB is a political body in itself. Upon
reaching the point at which investigation become inexact,
the NTSB must rely on its experience and best judgment- At
this point a problem for policy analysis arises. Because of
its political nature, the NTSB may have a vested interest in
citing certain causes. For example, rather than placing suspect on management procedures and possibly facing
repercussions from the industry, the NTSB may find that the
pilot in command is the easiest person to blame. Similarly,
the NTSB may find it politically difficult to place blame on other federal agencies such as the FAA, ATC, or at one time
the CAB-
CAB Activity
Determining the nature of the relationship between deregulation and the apparent compromise of air safety within a time series analysis requires an attempt to quantify CAB activity before deregulation. The most straightforward approach to such a task is to examine the frequency and type of CAB decisions- The CAB prior to
108 deregulation heard and reported their decisions through an organized reporting system in the Civil Aeronautics Board
Reports- Since these reports are indexed by case it was
possible to obtain the total number of cases heard by the
CAB for any given year based on the number of entries in the
table of contents to each volume. The total number cases
heard by the CAB included requests made by U.S. domestic air
carriers and foreign air carrier requests for U.S. routes
and entry- The total number of cases also included requests
made by cargo only air carriers as well as passenger only
air carriers. Of course, it is much more relevant to
compare CAB activity to airline accidents based on similar
inclusion criteria- Therefore, it was necessary also to
breakdown decisions made by the CAB into categories relevant
to the comparison - The breakdown of cases by type of
decision involved a more complicated task- The CAB heard
and made decisions about cases entailing requests by
airlines for permits to operate an airline, route
certification, market entry, fare increases, and scheduling;
issues over acquisitions, takeovers, mergers, and aircraft
lease agreements; labor disputes; and a myriad of
miscellaneous economic issues.
This research combines ail CAB decisions concerning
U.S- domestic permits, routes, and entry into a category
titled "route-" This category includes CAB decisions denying or approving all domestic requests for permits to
109 operate an airline, requests for waivers of the terms of the permit to operate a specific nonscheduled charter flight or training flights. The "route" category also encompasses route or entry requests. These requests were made by airlines wishing to modify existing routes, or to add new services to cities previously unserved by the petitioning airline. "Route" also includes CAB enforcement actions against air carriers operating without official permits.
Quantifying of CAB activity as an indication of regulations also included the frequency of decisions concerning airline
fares (in almost every case a request to raise fares). The
"acquisition" category included all actions taken over acquisitions of airlines mergers, interlocking directories, and aircraft lease agreements between airlines or airline
holding companies- The "labor" category encompasses all issues of labor where the CAB participated as mediator. The
"miscellaneous" category includes anything from consumer complaints to charges of unfair advertising practices to seat configurations on aircraft. These indicators of CAB regulatory activity prior to deregulation are the same indicators used to measure CAB activity in the transition years of 1978 to 1933, at which time the CAB was disbanded.
Figure 3.2 depicts the definition of each CAB decision type.
It is expected that tests of Hypothesis 1 will yield findings substantiating the correlation between deregulation and safety at least in the years immediately following
110 deregulation. As the dateline of the time series moves further from the year 1978, it is expected that indications of a correlation will drop. Because, as the major airlines became accustomed to the deregulatory environment, they also became more efficient in managing airline costs. They may
then have incentives to improve safety. However, this does not negate the hypothesis that airlines have been willing to
cut costs by cutting safety related corners in order to be more competitive.
Air Traffic Control Reports
The data used to measure the expected increase in air
traffic around hub airports was collected from the FAA
Statistical Handbook of Aviation- This document is a yearly
publication which reports air traffic activity by airport
control towers- Air traffic control activity is a count of
all landings and takeoffs cleared through a FAA Air Traffic
Control Tower- ATC Tower facilities track all traffic activity by category of air operations, air carrier, general
aviation, and military- As per the research criteria, only air traffic statistics pertaining to air carriers are
included. However, a total of all air traffic activity is used for comparative purposes- In the more recent editions
of the FAA Statistical Handbook of Aviation, a breakdown of air traffic by airport is reported and is also useful to
this research-
111 The data about air traffic control statistics can provide evidence to test Hypothesis 2, in that an increase in air traffic at hub airports is an indication of greater competition- However, higher levels of air traffic can not predict more midair accidents, they can only suggest the potential for midair accidents-
Conclusion
This researcher hopes systematically to test variables that indicate the presence of the relationship between deregulation and the compromise of air safety and suggest that members of Congress failed to identify the potential for negative safety consequences of deregulating the airline industry- The variables which have been selected for inclusion in the time series and case study analyses should yield measurable and meaningful results- This research aspires to present evidence that exhibits the need to rethink definitions of the public interest in terms that allow policy—makers to be more cognizant of social consequences of deregulation in general- The results of quantitative analysis are presented in the next chapter, and they are followed in Chapter VI by the case study analysis showing the decision making behind the numbers.
112 CAUSE DEFINITION
Least likely -causes least likely to be related to deregulation
Unknown -no cause was determined the NTSB Other -someone other than airline personnel was responsible Weather -weather was a factor in the accident
Somewhat likely -causes somewhat likely to related to deregulation
Structural Failure -failure of the aircraft itself Design -failure of an aeronautically engineered system Communication -inadequate external cockpit communication
More likely -causes more likely to be related to deregulation
Pilot Error -the pilot in command was at fault Cockpit Management -the crew failed to perform their duties, or to communicate vital information ATC •Air Traffic Control officials were responsible for the accident FAA -the FAA failed to intervene into potentially unsafe situations
Most likely -causes most likely to be related to deregulation
Maintenance error improper maintenance preparations resulted in the accident Poor Pilot Training — inadequate pilot training or inexperienced pilots Company Policy unsafe company practices
Figure 3.1 Airline Accident Causes By Their Proximity to Deregulation, and the Definition of Each Cause
113 CAB DECISION TYPE DEFINITION
Route —route, permit to operate, waiver of permit, and enforcement decisions
Fare -decisions about ticket prices
Acquisition —decisions about mergers, interlocking directories, and aircraft lease agreements
Labor —decisions about requests for the CAB to act as mediator in labor disputes
Miscellaneous —anything from consumer complaints to seat configuration decisions
Figure 3-2 Definitions of Each CAB Decision Type
114 CHAPTER IV
QUANTITATIVE FINDINGS
Descriptive Analysis
The data collected from the NTSB accident reports
provide evidence for testing the hypothesis that in the ten
year^ following the passage and implementation of the
Airline Deregulation Act of 1978, more air accidents can be
attributed to variables that are related to deregulation
than was true of causes of accidents in the decade preceding
deregulation -
The data collected are also useful in developing an
overall picture of the relationship between airline
accidents and CAB activity over the last 20 years. The
total number of fatal airline accidents meeting the
inclusion criteria for this analysis is 76. In terms of sophisticated quantitative analysis, this number does not
constitute a large data set. But although the number seems small, these accidents did occur and, if, as hypothesized, even a few accidents are related to deregulation, then that is sufficient to warrant investigation. Unfortunately, the small number of cases does make it more difficult to reveal significance by statistical means; very large differences between variables must be achieved before most techniques produce "significance" in small data sets.
115 nI-f the 76 total airline accidents, 33 accidents occurred in, or after, 1973 and 38 fatal accidents occurred before 1978. Table 4.1 depicts the occurance of accidents over a 20 year period. Table 4-2 reports the percent of each cause every time it was cited by the NTSB and the percent of each cause that was cited at least once. It is interesting to note that the highest accident occurrence per year, 8, was in 1972, but there were 7 accidents in 1971,
1978, and 1979. It should also be noted that 4 additional fatal accidents occurred in 1987, 2 more in 1938, and one in 1989. In these most recent accidents, either the NTSB has not made a final ruling on the causes, or the final report of the NTSB is not available to the public in print as of the date of this analysis. The frequency table of total causes cited by the NTSB indicates that pilot error was cited most often as having either caused the accident or contributed to the accident.
At first glance, it would appear that deregulating the airline industry did not affect safety: the number of accidents after 1978 is the same as before 1978, not counting the seven most recent accidents- Similarly, there was not a significant increase in accidents in any one year after the industry was deregulated. However, this does not mean that the hypothesis is disproved; it may instead mean that deregulation has had an effect on safety in a different way. The accident rate alone does not provide an adequate
116 understanding of mora sophisticated indicators of the relationship between safety and deregulation. The chief component for investigation is the relationship between deregulation and the causes of accidents. That is, the causes of the 38 accidents after deregulation were more closely related to the fact that airlines operated in an industry environment which permitted any and all competition in any and all markets- It is important to offer the results of the analysis of variance of accidents between the era of CAB activity under regulation, the era of CAB activity in transition, and the era of activity after the sunset of the CAB-
Analvsis of Variance
The importance of the relationship between causes of accidents and deregulation propelled thinking about the nature of the accident causes and their relative proximity to deregulation- Hence, four dummy vaiables were created by adding causes together in groups which reflect a theoretical relationship- The proper interpretation of the proximity groups "least likely," "somewhat likely," "more likely," and
"most likely," is based on a theoretical system by which the
NTSB accident findings are placed on a scale according to their relationship to deregulation. Figure 4.1 is a pictorial description of the proximity groups of causes and
117 the number of times any cause in a group was cited, by pre-
deregulation and post-deregulation eras.
Variance Findings of Causes
The airline accident causes cited by the NTSB range on
the theoretical scale from "unknown" to "company policy."
This range is not only an indication of specific causes, but
range is also a scale based on the tendency of causes to be
related to deregulation. That is, causes "unknown,"
"other," and "weather," are least likely to be related to
deregulation; these causes were combined in a category
titled "least likely." The other ten causes were
categorized similarly by their provximity to deregulation.
"Structural failure," "design," and "communication," were categorized as "somewhat likely." "Pilot error," "cockpit communication," "ATC," and "FAA," were categorized as "more
likely" and "maintenance error," "training," and "company policy" were categorized as "most likely." For each accident, the NTSB findings cited each cause at least once, and the causes have been counted across all accidents and their means have been calculated- In Table 4-3, the frequency with which causes arise within their categories is reported. Causes which seem to be "more" and "most" related to deregulation have the highest total frequency, at 97 for
"more likely" and 44 for "most likely" categories of causes-
113 In order definitively to state that these categories are accurate indications of the relationship between causes
and deregulation, one must devise a correlational analysis
to demonstrate the strength of the relationship. However,
it is impossible to enter a variable for which there is no
measure into a correlational analysis. It could be stated
that during the transition period, the period in which the
CAB was more lenient in their decisions toward airline
requests, the CAB in essence practiced deregulation.
However, after the sunset of the CAB there are no decisions
on which to measure deregulation. Since the time series is
used to test the effects of deregulation on safety it is
necessary to test all of stages of deregulation implemen
tation including the sunset of the CAB- After all, dereg
ulation is the absence of regulation, the absence of
governmental intervention into private sector operations-
Of concern here is the consequences of the absence of
government intervention on the safety of air transportation.
Therefore, attempts to measure the causes of accidents,
which theoretically seem to be related or not related to
deregulation, can be analyzed by their proximity to eras of
CAB activity or inactivity. Thus, CAB activity is grouped
by the years 1969 to 1977, 1978 to 1933, and 1934 to 19S7.
Table 4-4 displays the analysis of variance for causes
between each era of CAB activity. As shown, those causes more likely and most likely to be related to deregulation
119 have higher between group means than causes least likely and somewhat likely to be related to deregulation. Dummy variables were constructed for each of these proximity categories by an additive process, where each cause, cited at least once, was added to other causes with the same
theoretical proximity to deregulation. Those causes least
likely to be related to deregulation, "unknown," "other," and "weather," have means of -4419 in era 1, -3684 in era 2, and -5000 in era 3, with a possible range of O, meaning none
of the causes in any of the proximities was cited, to 3, meaning that each of these causes were cited in a given
accident- This category of causes, consistent with the
hypothesis, had little variance between the era of
regulation, the era of transition, and the era of deregulation as shown by an F—ratio of only -2355, with
little statistical significance. The causes "somewhat
likely" related to deregulation had respective means in each era of .2093, .4737, .2857, with a range of O to 3 with O meaning no cause cited, 1 meaning that each cause was cited
in a given accident. The causes of accidents somewhat related to deregulation does vary by era at an F-ratio of
1.7973, but without statistical significance. The proximity grouping, "more likely," contains the causes of "pilot error," "cockpit management," "ATC error," and "FAA error."
This proximity group had means of 1.12306 in era 1, 1.2632 in era 2 and 1.5000 in era 3 at a range of O to 4 with O
120 meaning no cause cited, and 4 meaning each cause was cited in a given accident. The "more likely" proximity group does not have as large a variance by era as the category of "somewhat likely," but it does have more variability than
"^^^^^ likely." Similarly, the proximity group of causes
"most likely," containing "mainetance error," "poor pilot training," and "company policy," have means for each era of
.4651, .8421, .5714 at a range of O, meaing no cause cited, to 3, meaning each cause was cited in a given accident-
This proximity group of causes indicates quite a bit of variance at F=l-29989; not as much as the "somewhat likely" category, but much more than the "least likely" category.
Here again, the statis- tical significance of "most likely" is not high, but it is almost significant at .2791.
Unlike the accident rate, the analysis of variance provides evidence to suggest that those accidents found by the NTSB to be caused by such things as "maintenance error,"
"poor pilot training," and "company policy" vary a good deal between the eras of CAB actvity. Similarly, the causes of
"structural failure," "design" and "communication," also varied between the eras of CAB activity. This can be explained by the fact that the transition period between
1973 and 1983 was a difficult period of adjustment for airlines as well as for government agencies such as the FAA and ATC- Essentially, the most accurate interpretation of these findings is that those causes theoretically related to
121 deregulation increased in their variance as policy prog ressed towards deregulation through time, particularly through the period of transition, despite the fact that the low number of cases does not show as much statistical sig nificance as would be desirable.
Variance Findings of CAB Activity
To continue interpretations of the analysis of variance, it is fitting to think about the CAB activity variables in three related segments of time. This also makes sense when considering that the implementation of deregulation and the sunset of the CAB was a gradual and transitional process- This time series analysis requires a lag period between the passage and implementation of the
Airline Deregulation Act of 1978 and the sunset of the CAB followed by complete deregulation. The lag period has been built in to the analysis at the point of data codification and entry- This was accomplished by coding the prior year's
CAB activity data with the current year's accidents. As
Table 4-5 shows, the total of CAB activity between 1969 and
1983 was 3,686 decisions- This number includes all requests heard from both U.S. domestic air carriers, foreign air carriers, cargo only air carriers, and passenger air carriers. The total number of cases heard by the CAB is important in that it is an indication of the scope and volume of regulatory activity- The average annual number of
122 decisions made by the CAB over the 15-year period of thx^
research was 245- It is also important to note that the
average number of decisions made per year before dereg
ulation was 206, while the activity after the Airline
Deregulation Act of 1978 was 304. This increase can be
explained by the fact that the CAB was busy, after passagele of airline deregulation, approving all requests made by
airlines. Even before the sunset, the CAB was effectuating
deregulation through their approval of all requests.
CAB decision activity pertaining to the specific
category of route requests, contains the largest number in
both the pre—deregulation era and the post-deregulation era.
The route category is important in that it is an indication
of the nature of CAB decisions about which airlines will
service which markets, and it implies a good deal about the
volume of air traffic- It follows that the route category
of CAB activity is the largest category because of the
assertion that relaxing route restrictions would be the best
way to open the industry to greater competition. Through
the transition period and after deregulation, the assumption about opening of hub markets to greater airline competition
is born out by the Air Traffic Control Tower reports.
The fare category of CAB activity is not as easy to explain as is the route category. The number of fare decisions made by the CAB in both eras is relatively high compared to the other categories- Prior to deregulation,
123 CAB decisions concerning fare increase requests n\ace by airlines were granted on a frequent basis, the CAB reasoning being that airlines were actually losing money in certain markets listed on their route certifications. By allowing airlines to raise fares in certain markets or across all markets, the CAB essentially subsidized the airlines in order to provide service to less profitable markets. After the transition to deregulation, the CAB granted airline requests for fare increases as well as requests to restruc ture fare systems and institute bargain fares programs.
These programs were expected to provide an airline with a more competitive fare structure, at least in hub markets.
Variance Findings by Type of Airline Another area for consideration is the type of airline operations, either commuter or major air carrier. The FAA and this research distinguish between commuter air carrier operations and major air carrier operations according to 14 CFR Part 135 and 14 CFR Part 121. The total number of commuter accidents for the time period under investigation was 34 and the total number of major airline accidents was
42, as reported in Table 4.6. The percentage of commuter accidents as compared to major airline accidents is indica tive of the notion that commuter air carriers, particullarly during the transition period, were involved in many more accidents considering that commuters do not fly as often, or
124 as far as the major air carriers. For example, in 1979, major air carriers had 11,406,570 takeoffs and landings, as compare to commuter air carrers 4,370,514 takeoffs and
landings (FAA Statistical Handbook of Aviation: Calendar
Year 1979, 1979). According to Table 4.7 there is a great deal of variance in the type of airline by the eras of CAB activity. The variance is quite high with a F-ratio of
^•*?274 and high statistical significance- The mean of type
of airline by eras of CAB activity is 1.3256 in era 1,
1-7368 in era 2, and 1-4286 in era 3 with a range of 1,
meaning commuter air carrier^ to 2, meaning major air
carrier- This finding indicates a very important point,
that commuter air carriers have been in many more accidents,
particularly during the transition period, than the major
air carriers- Practicing marginal safety proceedures seems
to have been a fairly consistent activity among commuter air
carriers during the tranisition period, suggesting that in an attempt to be competitive in a deregulated environment,
commuter air carriers chose to reducing expenditures by
reducing the margin of safety.
The early years of deregulation brought an increase in airline accidents and this was also the period of time when
cutthroat competition was most serious, the period of time when all airlines were operating in an unpredictable and unstable economic environment- Besides the uncertainty of competition (not knowing which major or upstart airline
125 will be the competition in any given market), this economic volatility was also caused by the oil crisis. Fuel costs were one of the largest financial expenditures of all airlines in the early years of deregulation-
Because fuel costs were so high, the competitive airline had to cut costs somewhere else in the company, or cut back on fuel costs- The definitive example of the consequences of an airline cutting back on fuel costs was the Air Florida flight that crashed on take-off into the
14th Street bridge in Washington, D-C- This specific case was cited by the CAB to have been caused by pilot error, ice accumulations on the wings, and the company policy of lower power settings on take off in order to conserve fuel. It was the combinations of company policy, pilot failure to have the aircraft de-iced after a long wait for takeoff approval from air traffic control, and the pilot's failure to recognize that the company policy of lower power settings would compromise the safety of the flight- In addition, the
NTSB cited that the pilots of the fateful Air Florida flight were not adequately trained in severe winter flying at an unfamiliar airport- This accident depicts the serious potential for the combined effects of deregulation to compromise safety- The financial strength or weakness of an airline is an element found within the assumption that opening the industry to greater competition creates an
126 unstable economic environment within which airlines must operate-
It is difficult to determine definitively what the relationship is between the financial status of airlines and airline accidents, because the lag period between a decline in financial status and an accident is extremely variable.
In other words, there are too many intervening variables to suggest a direct relationship between vulnerable financial
status and accidents- However, as an element of a theoreti cal argument it is logical to suggest that as revenues
decline and expenses rise, some areas of airline operations must be reduced to an acceptable level of costs. The key
element is the issue that this "acceptable level" is much
too low in areas directly influencing the safety of flights.
The notion that reducing airline operations to an acceptable
level in order to be more competitive is an important
element in determining the extent and nature of the rela
tionship between deregulation and airline accidents. It is
also necessary to discuss the results of correlational analysis to measure the level of association-
Measure of Association
Correlations Between Causes and Eras
To go a bit further into the analysis of the relation ship between causes of airline accidents and deregulation,
it is useful to examine the statistical association between
127 causes and independent variables. Table 4.3 displays the
Pearson correlation coefficients (r), and an indication of
the significance level for the two-way relationships between
each category of causes and the eras of CAB activity. As
shown, none of the correlation coefficients are high. This
suggests that there is not a statistical correlation betv^een
eras of CAB activity and the causes of airline accidents.
But there is suspicion that by combining the causes of
accidents into proximity groups theoretically related to
deregulation was creating interference with the results of
correlation analyses, the separate causes were correlated
with eras of CAB activity. The results of this correlation.
Table 4.9, indicate that only one cause was found to be
obviously associated with eras of CAB activity: "poor pilot
training." The correlation coefficient .2606, meaning that
airline accidents where the NTSB cited the cause of the
accident to include "poor pilot training," were more likely
to occur in later eras- None of the other causes were found
to have significant levels of association with eras of CAB activity. It should also be noted that the cause of "ATC error" could have included causes related to the
Professional Air Traffic Controllers Organization (PATCO) strike in 1931- However, because of the coding scheme used in this research, and because the degree of interference made by the strike can not be determined from the NTSB accident reports, the measure of the cause, "ATC error,"
128 does not include a separate measure of the effects of the PATCO strike-
Correlations Between Direct Causes and CAB Activity
In addition to the concern for the strategic role which
causes played in an accident, is a -oncern for the
association between causes cited as direct causes, and CAB
activity, both in eras and as specific types of CAB
activity- Table 4-10 displays the results of the cor—
relation analysis of the variables of direct causes and
eras of CAB activity as well as the type of CAB decision.
As shown, only "labor disputes" is weakly statistically
significant, with the negative coefficient indicating that
CAB decision on labor policy are rarely associated with the direct causes most likely to be a result of deregulation.
But labor may be more strongly associated with indirect causes of airline accidents, something that this simple quantitative analysis is unable to reveal.
CAB acquisition activity has no statistical sig nificance; however, it is appropriate to suggest that the airlines seldom requested authorization to acquire or merge with other airlines or holding companies in neither the regulated era nor the deregulated era. Airlines instead began requesting acquisition approval from the Justice
Department towards the end of the sunset of the CAB- This can be attributed to the fact that some of the major
129 airlines learned to be more competitive in a deregulated environment, while other airlines (major and upstart) were unable profitably to continue operations- Those airlines that were successfully competitive, in later years, acquired the unsuccessful airlines- This situation also produced the need for the CAB to hear more cases concerning labor disputes- Labor disputes arose as acquisitions and mergers among airlines caused employees to either loose their jobs or at least loose seniority- The acquisition—labor problem was made even more significant by the limited exercise of antitrust laws through the early and mid 1930s. As acqui sitions and mergers were systematically approved, labor was caught in the middle- Airlines and holding companies expended their financial resources to acquire fledgling airlines and often it was the employees who suffered the consequences of making a large airline, operating under debt management, more competitive.
Conclusion
The quantitative findings of this analysis suggest several key factors from which conclusions about air safety and deregulation can be drawn. Although the accident rate
is an indication of how safely airlines are performing, it alone does not provide enough information. By grouping causes based on their proximity to deregulation, the variance between eras of CAB activity can be determined.
130 The results of this examination of suggest that the categories of causes "somewhat," "more" and "most" likely related to deregulation, vary most between eras of CAB activity- The category of causes "most likely" related to deregulation has a weak positive relationship to eras of CAB activity, evidence supporting the hypothesis. When each cause was entered separately into the analysis, the accident cause of "poor pilot training" had a weak positive associa tion with eras of CAB activity. It also appears that there is more variance between eras of CAB activity for commuter airlines than for major airlines- Finally, there is virtually no association between the position of causes on the NTSB accident report and eras of CAB activity-
The data set for this research is small, only 76 cases, but it is the magnitude and significance of each case
that propels serious analysis of the consequences of airline deregulation- The magnitude and significance of these 76 cases can be made more graphic when considering that 2109 people died as a result of these airline accidents, 1043 of whom died in airline accidents since 1978, since dereg ulation- Because there are many intervening variables, such as technological advances in flame retardant cabin materials, emergency lighting and escape mechnisms, and advanced techniques in crash, fire and rescue, all allowing higher accident survivability in later airline accidents, a
total nurpber of fatalities should not be directly correlated
131 with deregulation- If anything, these technological advances should alone have decreased fatalities after 1978.
Siven such advances, fatality rates help to justify investigation of the compromise of air safety as a result of deregulation of the airline industry-
The findings of this research help to suggest that airline accidents happened even with regulations, but the accidents that happened after deregulation are more closely associated with factors created in the operating environ ments of airlines because of the political insistence that the industry be made more competitive- Therefore, it seems possible to argue that government has a higher inherent obligation to protect public safety by re-regulating the economic aspects of the airline industry through control over cutthroat competitive practices and greater enforcement procedures to check the exercise of airline takeovers and unmitigated antitrust violations-
Although the quantitative findings are limited, there are some patterns which emerge from this analysis, chief among which is the apparent compromise of air safety as a consequence, at least indirectly, of airline deregulation-
In addition, other patterns emerge which suggest the potential for safety considerations in two other areas.
These include the compromise of air safety within high density air traffic at hub airports, and the highly volitile cockpit relationship between pilots who went on
132 strike during labor disputes with airline- management and
those pilots who did not strike.
As the reality of the compromise of air safety has
become much more plausible, another pattern for investiga
tion emerges: the intentions of deregulatory policy—makers
as they sought the public interest. Thesa policy-makers
weighed the economic costs and benefits of deregulation both
to the consumer and to the industry against the policy
popularity of limiting government intervention into
business. Neither of these positions addresses or even
implies the potential for less safe air transportation
imposed on the traveling public as a result of airline
deregulation- That story is more fully told in the next
chapter. Table 4.1 The Occurrences of Accidents Between 1970 and 1989
e;:niinnH:Tm3 YEAR ACCIDENTS: PERCENTAGE OF OCCURRENCE
1970 6.6 1971 Q -7 1972 11io 1*^73 7.0 1974 7.n 1975 4.0 1976 4.0 1977 3.0 1978 9.2 1979 9.2 1980 7.0 1981 5.3 1982 4.0 1983 5.3
1934 1.3 1985 7.0 1986 1.4 1987 1.3 + 5.0 (NTSB DELAY) 1988 0.0 + 2.4 (NTSB DELAY) 1989 0.0 + 1.2 (NTSB DELAY)
NUMBER OF CASES 76+7 (NTSB DELAY)
(Note: In the years 1987, 1988, and 1989, 7 accidents occurred for which the NTSB either has not completed their investigation, or the final NTSB report is unavailable to the public at this time. The percentages for these 7 accidents were calculated using total number of cases, 83.)
134 < able 4.2 Percent of Causes, All Mentions, and Mentioned at Least Once for Each Case
ni'MilMMI.Iglll^l, —M !•• PERCENT PERCENT CODING CAUSES ALL MENTIONS AT LEAST ONCE MENTIONED
Unknown 11.0 11 r\
• iaBicaiBiim:3iii j r«i;ur^=MnM Other 9.2 3.0
n^iuiiHMfn:jjin.^umiannM !>itgTma?mJit m •/ieather 42.0
p -uajiiiUf Mf^uuBiixiB Q 4 Structural Fail ure 9.2 9.2
Design 8.0 8.0
Commun i c a t i on 11.0 11.0
Pilot Error 86-0 83.0
3 Cockpit Mgt 16.0 16.0
"'~"—****T— B nmmm acu uto :^ ATC 14.4
10 FAA 13.2
11 Maintenance Error 25-0 21.1
Pilot Training 12.0 12.0
Company Policy 2.4
Total number of cases 76-0 76.0
Total of Causes cited 196.0 142.0
« nnaBTTs wtn mm Kon n^ luni cttn
135
•I* JUJJI 1969 to 1978 1979 to 1987 TIMES CITED 55 50 45 40 35 30 25 18 20 15 151- 10=- mm 51- mm 0
least likely more likely some likely most likely CAUSES BY CATEBORY
Figure 4-1 The Likelihood of Causes' Relationship to Deregulation, 1969 to 1978, and 1979 to 1987 All Mentions
136
"•T \ Table 4-3 The Relative Proximity to Deregulation of Causes, At Least Once Mentioned, By Eras of CAB Activity*
PROXIMITY TO DEREGULATION GROUPS
Era of CAB 'L least 7- somewhat "/- more 7- most activity likely likely likely likely N 69-'77 regulation 22.0 10.0 53-0 16.0 '78-'83 transition 12.0 13.3 47.0 23.0 8:
'84-'a7 deregulation 17.4 8-7 52-2 22-0 23
x=»=p> - lO •Causes grouped according to their proximity to deregulation by adding causes together and creating 4 new dummy variables-
KEY: least likely=unknown, other, weather somewhat likely=structural failure, design, communication more likely=pilot error, cockpit management, ATC, FAA most likely=maintenance error, pilot training, company policy
137
'I "W^v Table 4.4 Mean Occurrence of Proximity to Deregulation Groups of Causes, By Eras of CAB Activity*
Eras of CAB least somewhat more most activity likely likely likely likely
'69-'77 regulation -4419 I .2093 J 1-12326i -4651
'78—'83 transition
'84-'87 deregulation -5000 | -2857 \ 1-5000 i .5714 • i 1 -«H— F-ratio -2355 I 1-7973 I -6583 11-2989 ^ 1 1 -H Significance .7908 I -1730 I -5208 I -2791
*Causes grouped according to their proximity to deregulation by adding causes together and creating 4 new dummy variables-
The range of each dummy variable is: 0=no cause cited to 3 or 4=all causes in the category cited
138
^x able 4.5 Percentage of CAB Activity, Type of Decision, By Eras of CAB Activity
Eras of CAB Activity Type of Decision
total route fare acq- labor mis- N
'69-'77 regulation 60.6 21.2 9.0 4.0 .62 4.6 ii 3066
'78-'83 transition 61-1 27.1 5.0 3-3 .1 2.5 ' 1 '84-'87 deregulation — — _ _ _ — i! 0 x=»=p<-05
(Note: After the sunset of the CAB in 1983, no decisions were made.)
KEY: Route —route, permit to operate, waiver of permit, and enforcement decisions Fare —decisions about ticket prices Acquisition —decisions about mergers, interlocking directories, and aircraft lease agreements Labor —decisions about requests for the CAB to act as mediator in labor disputes Miscellaneous —anything from consumer complaints to seat configuration decisions
139
Tfm mumws^ Table 4.6 Percentage of Accidents, By Type of Airline, Commuter or Major, By Year
NUMBER OF ACCIDENTS YEAR COMMUTER MAJOR PER YEAR Era One 1970 60 40 5 1971 42 57 7 1972 37 63 8 1973 20 80 5 1974 20 80 5 1975 0 lOO 3 1976 33 67 3 1977 50 50 2 Era Two 1978 14 36 7 1979 71 29 7 1980 100 0 5 1981 75 25 4 1982 33 67 3 1983 25 75 4
Era Three 1984 100 0 1 1985 60 40 5 1986 100 0 1 1987 0 100 1
N OF CASES 34 42 76
140 Table 4.7 Mean of Accidents for Airline Type, Commuter and Major, By Eras of CAB Activity*
Era of CAB Mean Activity Airline Type
'69-'77 regulation 1-3256
'73-'83 transition 1-7368
'34-'87 deregulation 1-4286
F-ratio 4-9274
Significance -0098 tAirline type is a dichotomous variable of values l=commuter airline and 2=major airline
141
«^v Table 4-8 Correlation Between Causes Grouped By Proximity to Deregulation With Eras of CAB Activity
PROXIMITY GROUPS OF CAUSES least somewhat more most likely likely likely likely T Eras of -013 i -113 l .121 I .096 CAB (76) I (76) i (76) l (76) Activity P=-875 I P=.331 I P=.300 i P=.411
Correlation coeffielent/(cases)/P=2-tailed significance)
(Note: The dummy variable "Eras of CAB Activity" was coded using each accident year in each phase of CAB activity-)
142 Table 4-9 Correlation of Each Cause With Eras of CAB Activity
ACCIDENT CAUSES
UNK OTH WEA STR DES « 11 » n I Eras of i .0790 \ .1002 I -.1565 1 .0465 ] .1629 CAB I (76) I (76) I (76) ] (76) ] (76) Activity I P=.519 J P=.413 I P=-199 I P=-704 ! P=.181
COM PIC COC ATC FAA I I I I . Eras of I -1292 I .09O1 I -1357 J --2084 I -1463 CAB 1 (76) I (76) I (76) ! (76) [ (76) Activity I P=.290 I P=.462 I P=-266 \ P=.086 I P=.230 » a a II a a —• MAT TRA POL
Eras of I --0493 8 -2606 \ -0399 1 CAB I (76) \ (76) \ (76) I Activity I P=-687 I P=.031 i P=-745 \
(Note: The dummy variable "Eras of CAB Activity" was coded using each accident year in each phase of CAB activity.)
KEY: UNK=unknown OTH=other WEA=weather STR=structural failure DES=design COM=c ommunication PIC=pilot error COC=cockpit management ATC=air traffic control FAA=federal aviation administration MAT=maintenance TRA=training POL=company policy
143
i^S. Table 4.10 Correlation of Types of Direct Cause Mentioned at Least Once With numbers of CAB Decisions in Each Type of Decision
CAB ACTIVITY
Total Route Fare Acquisition Labor Misc.
Direct -.0730 -.0893 -.1265 .0261 -.2320 .0913 Causes (69) (69) (69) (69) (69) (69) P=.551 P=.465 P=.300 P=.331 P=.050 P=.45
(Correlation Coefficient/number of cases/P=2-tailed significance)
(Note: There are 7 cases missing because there was no CAB activity after 1983, but there were 7 accidents for which the NTSB cited causes.)
KEY: Route -route, permit to operate, waiver of permit, and enforcement decisions Fare -decisions about ticket prices Acquisition —decisions about mergers, interlocking directories, and aircraft lease agreements Labor —decisions about requests for the CAB to act as mediator in labor disputes Miscellaneous -anything from consumer complaints to seat configuration decisions
144 CHAPTER V
CASE STUDY ANALYSIS
Introduction
The quantitative analysis of the relationship between airline deregulation and causes of airline accidents has yielded somewhat limited results since the exact level of association is not definitively known. There is clearly some relationship present in that as changes came to the
CAB, so too the preponderance of proximity groups of causes of airline accidents changes- However, seeking further evidence is warranted- The purpose of this chapter is to investigate two fundamental issues surrounding the contention that air travel, in the decade since deregulation, has become a riskier proposition for the flying public. The first fundamental issue for investigation recapitulates Hypothesis 2: "In the ten years following the passage and implementation of the Airline
Deregulation Act of 1978, air traffic surrounding certain large airports has become 'dangerously' more congested, when compared to levels of air congestion in the decade preceding deregulation -"
The second fundamental issue to be addressed is the presumption on the part of policy-makers that airline deregulation was a matter of economics, without adequately considering the alternative assumption that airline
145
'I iiwawj-juii mm. N^ deregulation has an adverse effect on safety, as stated in
Hypothesis 3: "At the time the Airline Deregulation Act of
1978 was passed the policy-makers held to the purely
economic theory of deregulatory policy, virtually ignoring
the social impacts on safety, as measured by policy-makers'
own statements in congressional documents concerning the
direction of deregulatory policy as related to economic
issues rather than safety issues."
An overview of the specific case of Eastern Airlines
will also provide an example of how the industry environment
since deregulation has fostered management-labor strife and
of the impact of that strife on potential safety factors.
Air Traffic Control
One apparent outcome of the implementation of the
Airline Deregulation Act of 1978 is that as the industry was
plunged into a highly competitive environment, some airline
management approaches contained practices which had a direct
and negative impact on safety. Similarly, as deregulation
opened the industry to greater competition, the hub and
spoke system developed. As the air traffic around the hub
airports became more and more dense, air traffic control
officials found that it was more and more difficult to
handle high density air traffic at some of the busiest
airports, such as Chicago O'Hare, Atlanta Hartsfield,
Dallas-Ft.Worth, and Denver Stapleton. Even though the
146
•!5v accident rate for midair accidents near hub airports may net have risen since deregulation, higher levels of air traffic around hub airports nonetheless increases the risk to the flying public for midair accidents.
The overall trends in air traffic control statistics suggest that air traffic density has increased since deregulation- However, an important limitation on the statistics pertaining to air traffic activity is that such statistics are somewhat difficult to interpret because of
the lack of consistency in reporting cumulative figures.
For example, in the years 1969 to 1980, air traffic control
figures, by region or by airport, were not separated from cumulative totals, thereby making comparisons of hub airports for the years prior and the years after deregulation quite inexact. Nevertheless, some meaningful
findings result from an analysis of air traffic control statistics-
Air traffic control tower statistics are calculated by the FAA based on the number of aircraft takeoffs and
landings. Similarly, the breakdown by type of aircraft operations, air carrier, general aviation, or military, is also calculated by the number of times pilots from each type of operation contacted an air traffic control tower.
According to Table 5-1, the total of air traffic activity (including air carriers, air taxi operation, general aviation, and military operation) at FAA Air Traffic
147
^x Control Towers fluctuated between 1970 and 1978 from 53 million recorded aircraft activity in 1972 to 67 million recorded aircraft activity in 1977, and then reaching the all time high level of 69 million recorded aircraft activity in 1979- Aircraft activity in 1930 and 1981 remained at the
66 million and 61 million activity level until the PATGG strike in August of 1981. Between 1981 and 1932 aircraft activity dropped by 10-935 million, but activity began an
increase in 1983 that rose to 60-950 million aircraft activity in 1987, still 4-7X below the pre-strike high level of 1979 (FAA Statistical Handbook of Aviation. 1973, 1976,
1979, 1983)-
The proportion of air traffic control activity with passenger air carriers only, is shown in the second column of Table 5-1- Air carrier activity totaled 10,929,013 in
1970, decreasing steadily to 9,339,479 in 1977- Then, in
1978, air carrier traffic activity for air carriers rose again to 10,063,259, continuing to the all time high of
11,406,570 in 1979- This is a 13-3X increase in air carrier operations; it can be speculated that this increase was due to the deregulation of the industry in the very first years of implementation of the Act. Too, even before
the Airline Deregulation Act of 1973 was passed, the CAB had essentially practiced deregulation in its virtually automatic approval of airline route, entry, and fare requests. As deregulation opened the industry to greater
148 competition, trunk airlines did not contribute the only
increase in the total number of flights flown, but upstart and commuter airlines also added to the increase in air
^^f^^^r operations. However, there was a marked decrease in air carrier operations in 1981 by 77-- This is an
indication that the aftermath of the PATCO strike skewed the
total of airline traffic in the years immediately following
the strike- It may appear that these figures in Table 5-1 are inconsistent with the premise; since the implementation
of airline deregulation, air traffic has increased as a
result of increased competition. However, the PATCO strike
significantly diminished total air traffic activity as well as by type of air operations, making the strike an
intervening variable which must be taken into account. It
is clear that traffic activity declined immediately after
the PATCO strike, but the later increase, specifically, the
rapid increase at hub airports, is closely linked to deregulation.
There are several limitations on speculating about safety based on air traffic control statistics- First,
there is a chance that errors were made in recording aircraft takeoffs and landings at air traffic control towers- Second, there is inconsistency over time in the method used to report statistics- Third, the intervening variable of the PATCO strike creates interference for research comparisons of the level of activity prior to and
149 after deregulation. Keeping these limitations in mind for all such statistics, it is possible to examine air carrier traffic figures in terms of passenger enplanements at hub airports, and in terms of air carrier departures from large hub airports- Examining these additional measures helps to
provide further evidence to substantiate the hypothesis that
^i«" travel is more risky because of the increase in high
density air traffic at large hub airports-
Statistics concerning passenger enplanements are
depicted in Figure 5-1 and they show that passenger enplanements have risen in every large hub market. These
sizable increases can be attributed to several factors: the
population growth of these two communities influenced an
increase in the demand for air carriage, and demand, coupled with the practice of deregulation, allowed the opportunity
for more airlines and more aircraft to service these
lucrative markets- A more telling indictment of
deregulation's effect on air traffic is found in the
increase in passenger enplanements between 1978 and 1937.
The significance of enplanement figures in these years must be balanced by the fact that there is a limitation on
comparisons between aircraft that airlines flew in 1969 and
the aircraft flown in 1978, and again in 1987. However,
there is a clear indication that since deregulation, more people are flying on airlines at the large hub airports-
These findings suggest that airline deregulation has
150 allowed more people the opportunity to travel by air, perhaps because of lower air fares on flights originating out of large hub airports- They also suggest that as the demand for air transportation increases, so too will the supply of airline flights, creating more air traffic specifically at these airports.
As passenger enplanements have increased since deregulation, airlines have added to the total of air carrier departures at large hub airports- Concurrent with the increase in passenger enplanements, an increase in air carrier departures at Atlanta and Denver between 1969 and 1978 is apparent in Figure 5.2. In 1987, Chicago O'Hare airport had the most air carrier departures at 330,123. The most significant percentage^ increase between the years 1978 and 1987 in departures is found at Dallas/Ft-Worth
International airport, with a 47% increase. It is interesting to note that at New York's John F. Kennedy (JFK) and La Gruadia airports, a decrease in air carrier departures was experienced. This is explained by the notion that as airlines learned how to be more competitive in the deregulated industry environment, they also learned the level of operation that would meet a certain level of demand. The New York airports experienced relatively small increases in passenger enplanements, suggesting a small increase in demand. The airlines servicing the New York airports learned to adjust the needed supply of departures
151 to meet the small increase in demand by better estimating the actions of competitive airlines who were servicing the
New York airports. In other words. New York was not necessarily the money-making market that airlines originally expected-
The main interest in air traffic density statistics is
the potential for midair collisions as a result of the
increase in traffic- The data collected for this research
include 7 midair accidents resulting in fatalities- The
potential for midair accidents can be measured in the total
of near midair incidents as reported to the FAA: that total
in 1987 was 1058 (FAA Administrator's Fact Book. 1990).
A specific example of the potential impact of high
density air traffic coupled with the crisis in air traffic
control since the PATCO strike is found in the records of
near miss incidents at Chicago O'Hare airport. The
documentation of near misses was produced for the use at
the Congressional Hearings of the House Subcommittee on
Government Operations. These hearings were held in 1987 to
discuss the well publized swell in near misses reported at
O'Hare- Over an 8 month period in 1985, 7 near misses were
reported. These near misses ranged in minimum clearance
from a maximum 3000 feet to a minimum 106 feet. Over an
eight month period in 1986, 12 near misses were reported,
ranging in clearance from 1019 to 100 feet, and such near
misses occurred .more than once a month- Keeping in mind
152 that, according to Figure 5-2, Chicago O'Hare is the busiest airport, the potential for disaster is made more disturbing- One collision per month would no doubt be a drastic threat to public safety.
The part which deregulation has played in the compromise of air safety can be shown to include not cnly the evidence provided by its relationship to causes of airline accidents, but also to the increased potential for midair accidents as greater competition in hub markets increases high density air traffic. Given these factors, one can speculate that deregulatory policy-makers failed to give the safety aspects of deregulation adequate thought.
It also seems reasonable to put forth the contention that policy—makers, guided by their complete commitment to promoting competition, simultaneously gave up a portion of their rightful decision making role. The role which policy makers released was the role of determining levels of acceptable risk. That is, through the regulatory process, policy—makers essentially determined the amount of risk which would be acceptable, but when they allowed free market competition to develop they also allowed other, actors to determine what is acceptable. From the findings presented in this research it would seem that airlines determine acceptable risk as they add aircraft departures to their schedules at hub airports- It also seems that in at least one instance, Chicago, 16 near midair collisions in 18
153 months was approaching the unacceptable level. Hence,
Congress did as they often do. A subcommittee was commissioned to investigate the problem. Policy-makers also have the tendency to place their faith in technology by funding anti-collision device programs. The decision premise being; let the machine determine the level of acceptable risk. Deregulatory decision-makers could have predicted the increase in air traffic. Essentially, the mechanisms were in place for the hub and spoke system to develop prior to deregulation, but as long as the CAB controlled routes and fares, the system was limited. As deregulation opened the industry to competition, high density air traffic became a problem that could have been foreseen if decision-makers had been less politically committed to deregulation.
Congressional Analysis
The Airline Deregulation Act of 1978 provides opportunity for examination of the political realities surrounding the move within Congress to limit the extent of federal government intervention into the economic aspects of business and industry. As an indicator of these political realities within Congress, Congressional documents associated with the passage of the act have been analyzed.
Evidence was gathered to analyze Congressional documents by identifying the number of times reference was made to safety
154
^.1 • r"»Hi^M^i«^«|^ issues. Congressional documents also examined the perspective of decision-makers as they defined elements within the issue of deregulation. The content of these documents can be used as evidence to test the hypothesis that the concern of Congressional policy-makers was for the public interest in a purely economic sense, without adequate consideration of safety. Having demonstrated thus far that there is a safety aspect of the public interest which has been compromised by the adverse effect of deregulation on safety, this research will now report the findings of case study analysis of Congressional hearings, reports, and committee recommendations used to debate deregulation of the airline industry prior to passage of the act.
The Congressional Subcommittee Hearings began in earnest in 1976 with extensive and detailed witness testimony and subcommittee member questioning. The hearing, "Reform of the Economic Regulation of Air
Carriers," was conducted before the House Subcommittee on
Public Works and Transportation in May, June, and July of
1976. During these days, the subcommittee heard testimony from witnesses espousing the virtues of policy to relax the regulatory hold of the CAB. There was of course controversy, but none over the larger issue of the safety impacts of deregulation. Instead debate raged over which of several similar proposed versions of the bill would best achieve airline deregulation.
155
.11. iMaHaBHHHaiKy Analysis of the political atmosphere surrounding airline deregulation suggests that by late 1977, advocates of deregulation found supporters from virtually all corners of Capital Hill. Although Gerald Ford, an early supporter of regulatory reform, lost the presidential election to
Jimmy Carter, deregulation remained as a policy goal of the
White House (Gerston, Fraleigh, and Schwab, 1938: 90). The
Washington Post reported on the new President's fervor for deregulation in 1977:
President Carter's continuous and outspoken support for the measure, which included hosting and appearing at a recent White House briefing on the subject, has convinced many within and outside Congress that the administration considers the bill an important part of its first-year legislative program and an integral part of the plan to improve the economy through increased competition where possible. (Shifrin, 1977)
President Carter was not the only avid champion of airline deregulation. Senator Edward Kennedy, Democrat from
Massachusetts, cosponsored legislation in the Senate along with Senator Howard Cannon, a Nevada Democrat. A version of this bill, which was a compromise between the Kennedy-Cannon
proposal and a proposal cosponsored by Republican Senators
James Pearson and Howard H. Baker, was analyzed and scrutinized in the committee and subcommittee process.
The legislative history of the proposal can be traced through various committees and subcommittees- With one exception, the examination of this process suggests that very little attention was given to the safety aspects of
156 deregulation. Policy-makers, defending the proposal against charges that there was potential for the compromise of air safety as a consequence of deregulation, made the standard argument that the FAA regulated safety, and the proposed legislation did not pertain to the FAA.
The exception is the subcommittee hearing "Airline
Deregulation and Aviation Safety," held before the House
Subcommittee for Government Operations, in late 1977. This was not the same subcommittee that recommended passage of the deregulation bill to the whole House, nor did its members sit on the conference committee that drafted the compromise bill for both the House and Senate. The members of the Government Operations subcommittee saw their job in terms of Congressional oversight responsibility. From this perspective, it seems natural for the Government Operations sub—committee to rethink the typical definition of the public interest being a purely economic matter. However, the subcommittee failed to identify the nature and extent of the relationship between the possible unstable economic environment caused by added competition and the compromise of air safety. Their failure can not necessarily be blamed on a lack of insight, but rather on a refusal to question the popular wisdom that deregulation was in the public's interest. From the opening remarks of the subcommittee's chairman. Jack Brooks from Texas, it was apparent that the perspective of the subcommittee was the assumption that
157 deregulation would not adversely affect safety. In fact, the subcommittee's report to Congress implied that if the results of deregulation increased the financial security and well-being for all airlines, it might increase safety. This endorsement was flawed: competitive capitalism creates a condition allowing one competitor to make money while the other competitor does not. In the process, both competitors cut corners.
In addition, the assumption that deregulation would enhance the financial status of all airlines was not in the
original justification for deregulating the industry.
Rather, the justification was that deregulation would
benefit the public by lowering air fares from the unnaturally elevated level set by the CAB.
Despite flawed thinking, the Subcommittee on Government
Operations did pose important questions to its witnesses concerning the affect of deregulation on safety. Here again, the standard answer was given. Proponents of deregulation contended that deregulation would not change the FAA's statutory duty, and that aviation safety would be unaffected by deregulation. Then Department of
Transportation Secretary, Coleman, testified that
... safety is not handled by the CAB, it is handled by the FAA, and to the best of our ability we have maintained high safety standards, and we well continue to do so. In fact, after I took over I was concerned about the fact that some carriers were losing money, and from my business experience I know that ofttimes the first cut may well be in safety-related things, and
158 I suggested to the FAA some people up here say I can't order them, but I ordered the FAA to make a survey to make sure that was not happening. And there is nothing in this legislation which m any way will affect safety and we will maintain the same high safety standards and try to improve them, and there is nothing in the bill that affects that.
It should be noted that the study Mr. Coleman ordered the FAA to undertake was never begun (U.S. Congress, House Subcommittee on Government Operations, 1977). In fact, the primary recommendations made to the whole house were directed toward improving the FAA. The subcommittee essentially exercised their power of legislative oversight, in an effort to evaluate the FAA and make recommendations for a more properly operated agency. The formal recommendations of the subcommittee included the realization that safety might by affected by deregulation, but focused more on the then current deficiencies in the FAA. However, from an examination of the recommendations it is apparent that the subcommittee did not properly anticipate the likelihood that the FAA would be unable to maintain safety standards. This subcommittee failed to anticipate that, as many new upstart airlines took advantage of the relaxed route and fare control, and many other airlines added flights in order to be more competitive, the FAA would be unable to keep pace with the industry, and be therefore unable to maintain safety standards through the primary means of onsite inspections.
159
-»-wwr\ With virtually no attention paid to the findings of the Government Operations subcommittee, the Senate
Subcommittee on Aviation of the Committee on Commerce,
Science and Transportation offered the Kennedy-Cannon sponsored bill, "Air Transportation Regulatory Reform Act of
1978," to the Senate. It passed by a vote of 33-9 (Gerston, et al- 1988). Senator Cannon managed the floor debate and
introduced the bill by urging his peers to vote yes.
Opposition to this bill cannot be justified by claiming that there is something inherent in the structure of the airline industry which requires strict regulation. Such arguments are nonsense. The airline industry clearly does not have the characteristics of public utilities which must be regulated because their sheer size prohibits any competition. Indeed, it is difficult to imagine an industry whose main capital assets— airplanes—are as mobile. What industry could be better suited for adapting to the marketplace? (Congressional Digest. 1978: 172)
The Senator also suggested:
Virtually all the arguments against airline reform, and automatic market entry in particular, are identical to the classic arguments of academicians who oppose a free enterprise economy— uneven allocation of resources, concentration of economic power, inefficiency, unfair advantage of those with greater resources, all are arguments we find anathema in the absolute. (Congressional Digest. 1978: 172)
From the Senator's own remarks it is apparent that he and other proponents of deregulation defined criticism of
the bill in economic terms, when in fact, ten years later, the bill's most incriminating criticism is its lack of safety considerations. In addition. Senator Cannon in his opening remarks announced the list of supporters of the
160 Kennedy-Cannon bill; the Aviation Consumer Action Project, the National Taxpayers Union, the American Association of
Retired Persons, Common Cause, the Americans for Democratic
Action, and the American Conservative Union. With this list of supporters, few members of Congress could find sufficient reason to vote against the legislation. As suggested by many Congressional scholars, members of Congress are quite conscientious of their reelection prospects (Fenno, 1973;
Fiorina, 1977; and Mayhew, 1974). These interest group supports of deregulation would no doubt catch the attention of reelection—minded members of Congress- The unmitigated
popularity of deregulation convinced many senators to lend
it their support- Just as it is often difficult to defend
raising taxes, it was difficult for members of the Senate to justify maintaining or increasing the size of the federal government-
On the other side of the Capitol, House hearings were held on April 18, 1977, to discuss deregulating the airline
industry, before the Aviation Subcommittee of the House
Committee on Public Works and Transportation Representative
Glenn M- Anderson (D-California) introduced a regulatory reform bill that proposed to amend the Federal Aviation Act of 1958 to improve air service and provide flexibility in air fares-
The experience of deregulation in the House was much more controversial than that of the Senate- After having
161
^ discussed in detail the experiences of each member's flight to Washington, D.C- from a home district, the members implied that what was good for each of them, must also be good for the public. In other words, the members were defining the public interest in terms of how efficiently
they themselves were able to travel. Three key members of the House Aviation Subcommittee, all fellow Democrats,
Elliott Levitas of Georgia, Allen Ertel of Pennsylvania, and
Norman Y. Mineta of California, offered and succeeded in
passing a compromise measure which aimed to abolish the CAB by the end of 1983. The House passed its version, 363 to 8, on September 21, 1978. And, in early October, a conference committee was able to propose and pass a compromise bill which President Carter signed into law on October 24, 1978.
Although there is strong evidence to support the contention that deregulatory policy—makers failed adequately to consider the safety—related impacts of free enterprise competition, the policy—makers did manage to hedge their bets just in case their prediction that safety would not be affected was incorrect. As Senator Adlai E. Stevenson, III, a democrat from Illinois, pointed out in floor debates, deregulation legislation did carry a provision that addressed the safety issue.
Although the bill does not alter aviation safety procedures, there was some concern that more intense competition might induce carriers to slight safety standards. To prevent this from happening the committee has put safety at the top of the bill's list of policy guidelines for CAB
162
^ consideration. We have also directed the Secretary of Transportation to conduct a continuous review of the effects of the act on air safety and to report to the Congress annually for the first 5 years. (Congressional Digest. 1978: 178)
Given the institutional and political inability of
Congress to practice sufficient oversight, requiring the FAA to prepare and submit annual progress reports was the best means available to deregulatory policy-makers. However, inability is not necessarily a credible justification for allowing the public interest to suffer. One limitation on
Congress' ability to oversee administrative agencies is the committee system itself. As seen in the example of the
Government Operations subcommittee, such decentralized decision—making is a time—consuming and laborious process with many points at which policy, or policy recommendations, can be slowed to a creep or halted altogether. Similarly, subcommittee recommendations may or may not be placed within the final version of the bill. As Fenno (1973) suggests, members of Congress, ofttimes, place value on committee assignments based on the perceived prestige and influence afforded a committee or subcommittee. In the case of legislation to deregulate, one of two possible scenarios can be drawn: that the members of the Government Operations subcommittee may have not carried enough influence significantly to affect the direction of popular legislation; alternatively, the members of the Government
Operations subcommittee were still convinced that safety
163 would be unaffected by deregulation and that their formal recommendations reflected only the need to improve the FAA, not to reconsider the potential impacts of implementing airline deregulation.
Based on the work of Fenno (1973), it is possible to speculate about the strategic premises which members used to make decisions. Fenno suggests that each member of each committee (or subcommittee) is faced with the problem of
reconciling their personal goals with the goals of the environmental context within which the committee (or subcommittee) is required to operated. The key to the problem is that the members make agreements which Fenno calls strategic premises. "Agreements on strategic premises take operational form as agreements on rules for making substantive decision" (Fenno, 1973: 46). In the case of airline deregulation, it appears that a strategic premise of
the subcommittee for Government Operations was to define the environmental context in economic terms, by suggesting that airline deregulation would not affect safety. Because of this strategic premise, the decisions and recommendations coming out of the subcommittee were cast in the consistent terms of its strategic premise; hence, the opportunity for a more accurate forecast of the impacts of deregulation was missed.
The logical foundation of the strategic premise, that the FAA would be able to maintain safety standards, assumed
164
'"" ".".«»*• ^x that safety in the industry would be regulated by government rather than by airline self-regulation. Given the limited institutional ability of the FAA to enforce and maintain safety standards in a highly competitive environment, the strategic premises of the Government Operations subcommittee were inaccurate. Likewise, the logic that airlines themselves are capable of regulating safety in a deregulated environment, assumes that airlines would be willing to limit the tendency to narrow the margins of safety. Such has not
necessarily been the case.
The outspoken political appointee to the CAB, Alfred
Kahn, realized the necessity of regulation, but refused to
believe at the time that competition would not be better.
I am well aware of the imperfections of competition in the real world, and do not shrink from governmental intervention to remedy those imperfections, to maintain competition, to correct market failures and to regulate ^natural monopolies.' But wherever competition seems feasible, my disposition is to put my trust in it in much the same way as I do in democracy—as a manifestly inefficient system that is better than any of the alternatives. (Aviation Week. 1978)
In addition to cognitive flaws within the strategic premises, another implication arises. Government
intervention into the private sector is sometimes necessary in order to ensure the protection of the public interest; however, the strategic premise here was that competition in the airline industry was of such priority that government intervention by the CAB was neither preferred nor needed.
These strategic premises were not only held by the members
165 of the Government Operations subcommittee, but various otrer committees, the Congress as a whole, and even the expert witnesses called upon to testify at the hearings.
The Eastern Example
In the decade after the passage of the Airline
Deregulation Act of 1978, Eastern Airlines provides an
example of how the industry environment has fostered management-labor strife, strife that has potential effects
on safety factors involved in labor disputes.
Although many members of Congress identified the
potential for labor disputes to be an effect of deregulation, many members also felt that labor could be
protected under provisions of the Act. Gerston, Fraleigh, and Schwab (1988: 96) says that "Although labor unions were
not without influence in Congress, airline workers did not garner much sympathy." The authors went on to suggest that
airline pilots, flight attendants, and aircraft mechanics earned comparatively high salaries and have not been hurt by
deregulation.
The recent history of Eastern airlines stands in stark contrast to the notion that labor has not been harrr^ed by deregulation. The harm labor has felt as a result of deregulation consists not only monetary effects, but in areas which could also affect safety. As only one example, most carriers have increased the hours pilots fly, while
166
^N. placing newly hired pilots on a two tiered pay system, paying senior pilots almost twice as much as juniors earn
(Delta Airlines, ALPA Pilot Pay Rates, 1989). Some airline managements have also demanded wage concessions from all employees in order to cut the bottom line costs of operations. It seems that cutting labor costs would be an adequate way for an airline to be more competitive in the deregulated environment; however, serious labor disputes can create situations apt to compromise safety, as the following example will show.
The Airline Deregulation Act of 1978 has a continuing effect on change in airline labor policies. As carriers make new groundrules, such as the two tier pay system, labor finds itself targeted in a competitive formula where the
profit margin is considered a function of wage and labor costs. As the new airline entrepreneurs entered the airline
business in 1981, they challenged the established carriers.
Among the entrepreneurs was Frank Lorenzo, who took over
Texas International and through various financial maneuvers acquired Continental Airlines, Frontier Airlines, People
Express, New York Air, and Eastern Airlines. The main feature of Lorenzo's strategy required the assumption that
by lowering operational costs and offering lower fares, he would be able to compete successfully against the older established airlines. In an attempt to lower operating costs, Lorenzo realized that some costs were fixed, such as
167 rent on leased terminal space and airplanes, and fuel costs.
He believed that labor costs were the segment which could be
lowered.
Lorenzo's management style can be seen first in the case of Continental Airlines. In October 1983, Lorenzo,
chief of Texas Air Corporation, could not get an agreement on a labor contract with the Continental unions. He
declared the airline bankrupt, nullified all labor contracts, and cut wages 50%. The experience at
Continental sent a clear message, reinforced by the
President, that unions could be defeated and government
would not intervene- Such has also been the case at
Eastern.
It was apparent that after Texas Air Corporation took
over Eastern Airlines, Lorenzo had assembled the largest
airline in the country. The narrator of a televised
Frontline program said.
With Eastern, Lorenzo got his biggest bargain. The price was *620 million—a steal for an airline Eastern's size. The payment plan was even better. *340 million to be paid by Eastern's future revenues. Lorenzo persuaded Eastern to borrow more than half the money to finance its own sale. (WGBH Frontline. January 81, 1989)
On the same program, Lorenzo acknowledged that "Eastern has
more debt than some of its competitors, so therefore the
labor area is the only area where Eastern really has an
opportunity for reasonable relief in order to try to level
the playing field." The Air Line Pilots Association,
168 though, has accused Texas Air of bleeding the cash from
Eastern and attempting to prevent profitability buy charging
Eastern with fees that are paid to Texas Air Corporation.
On March 4, 1989, Eastern pilots and flight attendants
went out on a sympathy strike with the International
Association of Machinists and Aerospace Workers Union
(DiNunno, 1989: 24). The management of Eastern responded
to the strike by hiring new pilots. A New York Times
special writer, Eric Weiner, reported that Eastern had hired
500 new pilots to replace the striking ones, and that 51 had
met the federally mandated competency requirements and had
begun carrying passengers (Weiner, 1989). Weiner also
pointed out that not only did Eastern management have to be
concerned with replacing and training new pilots, they also
had to be concerned about pairing inexperienced pilots on
the same flight. Hiring and training new inexperienced
pilots establishes conditions ripe for safety problems.
Another issue is the problem of cockpit tensions that could compromise safety when striking pilots and new hire pilots fly in the same cockpit- As seen in the previous analysis of causes of airline accidents, it is apparent that cockpit communication and management was a critical cause in at
least 9 accidents about, 12X, included in this study-
Safety can be compromised any time an airline has undergone labor dispute, a disruptive mergers, or any time management strategies cause polarized factions between company pilots.
169 Conclusion
Having examined three significant issues surrounding
the overarching issue for the impact of the Airline
Deregulation Act of 1978 on air safety, several conclusions
can be drawn- First, air traffic has increased, although
not to the level achieved before the PATCO strike. Since
the PATCO strike in 1981, the rise in high density air
traffic surrounding hub airports, coupled with the crisis in
the number of air traffic controllers to deal with the
increase, greatly raises the risk of midair collisions.
From the analysis of air traffic statistics, it is apparent
that passenger enplanements and air carrier departures have
risen significantly since deregulation, with Chicago
O'Hare, Atlanta Hartsfield, and Dallas/Ft. Worth
International airports becoming America's three busiest
airports-
The second conclusion is that in actuality, deregulatory policy-makers failed to identify the potential
effects of deregulating the airline industry. The political
popularity of deregulation helped to convince policy—makers
that promoting competition in the industry was in the public's interest. Based on the premise that economic deregulation of the industry would best serve the public, members of Congress chose to define the public interest in purely economic terms- By defining the public interest in
170
^ these terms, the consequences of deregulation for safety were ignored-
In addition, recommendations and requirements for safety, deemed necessary by Congress in the Act itself, were aimed squarely at the FAA. During Congressional hearings,
the premise that safety would not be affected by deregulation was justified by claiming that safety is
regulated by the FAA, and deregulation did not affect the
FAA- The recommendations and requirements within the
legislation were clearly not adequate. But it is highly
unlikely that any amount of legislative requirements of the
FAA, no matter how stringent, would be able to keep pace
with the rapid growth within the industry, as the authority
for decisions about routes, markets, and fares was removed
from the CAB, and placed in the hands of the management of
the major airlines, the commuter airlines, and the
entrepreneurs who entered the industry.
Finally, as deregulation encourages competition, it
also motivates airline management to cut operating costs.
Just as operational costs have been cut in ways that are
related to causes of airline accidents, cuts in wages too can be identified as having the potential to create unsafe conditions from within the cockpit.
171
•"•^x Table 5.1 FAA Air Traffic Control Activity For Traffic Totals and For Air Carriers By Year
7. OF AIR CARRIER YEAR TOTAL AIR CARRIER ACTIVITY
i*^70 55,280,493 10,393,294 13.3 1971 53,702,396 10,394,000 19.3 1972 53,255,919 9,693,397 13-2 1973 56,553,953 9,922,044 17-5 1974 56,845,120 9,476,535 16.6 1975 58,934,700 9,374,363 15.9 1976 62,491,505 9,339,479 14.9 1977 66,724,291 9,340,500 13.9 1978 67,173,434 10,063,259 14.9 1979 69,039,372 11,406,570 16-5 198iQor0» 66,195,066 10,148,956 15.3 1981 61,570,467 9,487,963 15.4 1982 50,634,938 9,049,167 17.8 u.v«1983^ 53,320,931 9,673,951 13.1 1984 56,958,937 10,879,575 19.1 1985 57,937,465 11,281,308 19.5 1986 58,877,700 12,226,060 20.8 1987 60,950,000 13,076,000 21.5
"Activity" is defined as the number of takeoffs and landings at FAA Air Traffic Control Towers.
"Air carrier" is defined as per 14 CFR Part 121.
SOURCE: absolute numbers gathered from FAA Statistical Handbook of Aviation. 1970 to 1974, 1975 to 1979, 1980 to 1984, and 1985 to 1987- U-S. Department of Transportation, Federal Aviation Administration. Washington D-C-: Government Printing Office. Percentages calculated by author.
172 1969 1978 1987 WW (in millions)
Atlanta, Hartsfield m 7.7 18.2 + 1367. MMMSMMi<^MMM^y 22.7 +247. Chicago, O'Hare 13.9 + 517. MMMMMMiMMMMMmm^ 26.1 +237. Dallas/Ft.Worth, International 5.0 :i=i^iE|!i||i=ii:i^^i^ 9.6 +927. Mii!MiS!i!i0M^ 19.9 + 1077-
Denver, Stapleton 3.4 mmm 8.9 +1627. 111 -• 1111 * 1111111111 (11 11111111111 ^aa;^ 15.6 +757. Los Angles, International 3.4 SccSSizS^ 13 . O +547. SSiSSiiMSiiS:::::::^^^^ 19-0 +467-
New York JFK 7-2 +187- MiiiiMMMMiM 10-1 +18-87-
New York, La Guardia 5.9 +447. mmmmMmmm 11-3 +327.
SOURCES: figures calculated from FAA Aviation Forecasts: Fiscal Years 1988-1999. 1988. U-S- Department of Transportation, Federal Aviation Administration. Washington D.C: Government Printing Office. FAA Statistical Handbook of Aviation. 1969. U.S. Department of Transportation, Federal Aviation Administration. Washington D.C: Government Printing Office. Percent change calculated by author-
Figure 5-1 Air Carrier Passenger Enplanements At Seven Hub Airports, 1969, 1978, and 1937.
17: 1969 1978 v;:;:::::: 1987 (in thousands) Atlanta, Hartsfield 161.9 ^^^^^^^^^Mmmm^^mmmm^mMMm 240.7 +437. <^i^^i^ii^^^ 281-8 + 177. Chicago, O'Hare 290-2 mMmmm 239.9 -.17. •'••^•^Mmm^MMiAM^^^ 330.1 +137. Dallas/Ft-Worth 117-3 ^^^mm^^^^^ 153-5 +307. wmmMmmmmmmmfmmm 227 - 7 +487. Denver, Stapleton wmmmmsam so-4 mm:^mmmmmm i36 - a +697. •'••MMMmMMMMMMMMM^ 201.2 +477. Los Angles, International
M^^^^^^m§^^^^ 152.1 -9.17. M$!:iiMM!MM^ 204.3 +347. New York, JFK 136.3 illiillliiii^iisiHliiiills^ 101.7 -347. Si::S:Si;MS?MSJ74.8 -35.97.
New York, La Guardia 117.6 :;::=i:isi=::i::rigi:irc:-::c;:>::::;ii=:=S::::S: 1 33 S + 137. ;V;N\';';»;';;»;»;»H:WWV;;-.V;'W'A'^ I'^A 9 -77.
SOURCES: figures calculated from FAA Aviation Forecasts: Fiscal Years 1988-1999. 1988. U.S. Department of Transportation, Federal Aviation Administration. Washington D-C.: Government Printing Office. FAA Statistical Handbook of Aviation. 1969. U.S. Department of Transportation. Federal Aviation Administration. Washington D.C: Government Printing Office. Percent change calculated by author.
Figure 5.2 Air Carrier Departures per Year At Large Hub Airports, 1969, 1973, and 1987
174 CHAPTER VI
CONCLUSIONS DRAWN FROM THIS STUDY
Introduction
This research has provided evidence to argue that
airline deregulation is a case where economic deregulation
has had negative social consequences. In other words, it
was assumed by policy-makers and scholars that airline
deregulation was a decision about the economics of the
industry, not its safety. The purpose of this chapter is to
reiterate three significant findings of this research.
These findings arez 1) policy-makers held the premise that
deregulation was best for the public, while neglecting
public safety; 2) policy scholars who put forth theories
suggesting that regulations are both economic and social in
nature are accurate, but these theories are limited in their
ability to model the impacts of deregulation, and 3)
although limited, the quantitative findings suggest that
there are indications that air transportation safety has
been compromised by deregulation.
The Decision Premise of Policy-fiakers
Policy-makers face a dilemma as they attempt no satisfy conflicting demands placed on government. On the one hand, demands are made of government for greater protection of private life, while, on the other hand, demands are made
175 that call for limited intervention of government into the private sector. In the case of airline deregulation, policy-makers were not only faced with the dilemma of conflicting demands, but they were also faced with the extreme popularity of one specific demand, deregulation.
The popularity of deregulation, and the political insistence
that the industry be opened to greater competition, obscured
from policy—makers the wider perspective on the proper role
of government.
Deregulatory policy—makers were steadfast in their
commitment to deregulate the airline industry. In
addition, the minor attempts made to assess the potential
impacts of deregulation on safety were met with arguments
denying the connection between safety and deregulation.
Policy—makers justified their orientations openly by
embracing consumerism, and more subtly by particularizing
their thinking. They saw safety as the only job of the FAA,
and economics as the only job of the CAB. Throughout the
industry-government relationship, administrative regulatory
responsibility for aviation overlapped several agencies.
Yet, when political pressure to deregulate grew, policy
makers failed to acknowledge that there is a relationship
between the functions of the FAA and the CAB. As seen in
this analysis, statutory and administrative changes in one
agency (the CAB) had direct effects on the ability of
another agency '(the FAA) to carry out regulatory duties.
176 The Perspective of Policy Scholars: Economic. Social, or Both?
Just as policy-makers sometimes are limited by
perspective, so too are policy scholars. Policy literature
has been limited by persistent attempts to particularize
scholarly thinking in at least two ways. First, some
scholars have contended that regulations are only economic
in nature, and therefore analysis of policy processes and
outcomes can be made in exclusively economic terms. Second,
although other scholars have identified a distinction
between economic and social regulations, these theories are
limited by the assumption that impacts only flow in one
direction, from social to economic. Typically, the theories
of Derthick and Quirk (1985), Ripley and Franklin (1986)
Reagan (1987), and others, reasonably accurately described
regulatory reality. For example, regulations aimed to limit
air pollution are considered by these scholars as social
regulations. They also recognize that social regulations
can have economic impacts on various segments of society.
However, these scholars have only identified an
unidirectional flow of impacts, when in fact, deregulatory
policy impacts can also flow from the economic to the
social. In other words, unidirectional theories are correct
in claiming that regulations are more than merely economic
responses to economic phenomena, but they fail to identify
the multidirectional flow of deregulatory impacts.
177 Having concluded from this analysis that the economic deregulation of the airline industry has had social impacts
on the public, it is possible, now, to suggest that
regulatory theory be expanded to include the "seamless web"
of economic and social policy impacts.
Quantitative Findings
As stated in Chapter III, a triangulated approach was
used to determine the extent of the relationship between
safety and deregulation- Now, having a better understanding
of the role deregulation has played in airline accidents
since its implementation and having a better understanding
of the motivation of policy—makers, it is possible to draw
broader conclusions about the present safety of air
transportation and to make at least limited predictions
about the future of air transportation safety-
Although the quantitative analysis has produced
limited results, patterns have emerged which indicate some
sort of disturbance in air safety for which deregulation
seems to be the most likely explanation- The accident rate
seems to have remained relatively steady over the last two
decades, but in those accidents which have occurred since
deregulation there is evidence to indicate that there is an
association between causes of accidents and deregulation.
One emerging pattern is that of causes closely related
to deregulation appearing in the findings of NTSB
178 investigations of airline accidents- It is significant that pilot error, cockpit management, ATC error, and FAA error have been found to be causes in accidents occurring since deregulation- Of more significance is the fact that causes highly related to deregulation have also been found to be causes in recent accidents. Findings of maintenance error,
poor pilot training, and company policy suggest that airlines, operating in an unstable deregulated environment,
have cut corners on maintenance and pilot training in order to be more competitive- In addition, direct company policy
aimed at being more competitive in a deregulated environment
has also been manifested in the causes of airline accidents.
A similar finding is that commuter airlines, particularly in
the transition period of deregulation, were
disproportionately involved in accidents given their share of air travel, and the causes of these accidents seem to be
related to deregulation- In fact, the transition period, after the passage of the Act in 1978 and before the sunset
of the CAB in 1983, was a highly volatile period for commuter airlines and the major airlines as well- This was a period when new entrants to the industry were vying for
the competitive edge in lucrative markets, while at the same
time the incumbent airlines were also trying to became more competitive as well- Unfortunately, this free market governmental approach predisposed airlines to cut expensive corners, compromising air safety.
179 In addition to these cost-cutting tendencies, deregulation has also added to the increase in air traffic at hub airports. Although the PATCO strike is an intervening variable in the analysis of air traffic activity statistics, high density traffic has an independent influence upon the risk of midair collision. Since there are some airports which are more lucrative, competitive airlines schedule as many departures from them as possible
to take advantage of the increased demand for air transportation- Considering the air traffic activity statistics for hub markets, and the parallel statistic for near midair collisions, it can be suggested that there is a
relationship between the two, and the relationship is one of
risk to public safety- This is particularly striking at
Chicago O'Hare airport, with departures numbering 330,100
per year and frequent reported near midair misses.
Along with the implication that air transportation at hub airports has been made more risky, the FAA has also
predicted that aircraft traffic at Chicago O'Hare will rise in the year 2000 to 935,000, while at Atlanta Hartsfield activity will increase to 357,000, and at Dallas-Ft. Worth
International the figure will be 700,000 (FAA Aviation
Forecasts: Fiscal Years 1938-1999). These are quite profound increases. Unless something is done either to slow
the growth in air traffic activity, or somehow to provide an
180 increase in capacity that will result in an equal level of safety, the risk to the flying public will also increase.
In addition to the apparent compromise of air safety,
this analysis has provided evidence to indicate that members of Congress, as deregulatory policy-makers, saw
their legislative duty to be protection and prorrction of the
public interest- But they defined the public interest in
purely economic terms. The standard justification in
defense of deregulation when questions about safety arose
was that safety was the administrative responsibility of the
FAA and that deregulation did not apply to the FAA.
The labor—management strife at Eastern airlines, though
certainly not settled, provides an interesting example of
the changes in airline management approaches to
competition. In the era of complete deregulation, some
airlines have made cuts in labor costs in order to be more
competitive- Airline accidents that have been blamed on
deregulation have received a great deal of attention, and
airline management now recognizes that cuts in highly
visible areas are not good for business, in both safety and
marketing senses- In the case of Eastern airlines, as seen
in Chapter V, management chose to cut costs on labor by
systematically attacking the unions at Eastern, causing a
greater risk to safe air transportation in at least two
significant ways- Inexperienced pilots were hired to
131 replace striking pilots, and once all the pilous returned
to work, cockpit communication was hampered.
The final issue of concern is the enduring practice of overlapping agency control of the aviation industry, rarely
adequate to begin with, and especially problematic given
multiple agency responsibility. It is apparent that policy
makers failed adequately to assign responosibility for the
public interest- Also apparent is the fact that the airline
industry went through a highly volatile and unstable
transition period after the passage of the Airline
Deregulation Act of 1978- Moreover, the era of complete
airline deregulation has also created an environment, though
not as volatile, that is and continues to be quite dynamic.
The dynamic forces of deregulation have created uncertainty
and organizational stress for the FAA as well as the
industry.
According to the FAA, as of 1939, their major work
force contains 16,984 air traffic controllers and 2,330
flight safety inspectors (FAA Administrator's Fact Book.
1990: 24)- Also according to the FAA, the projected need
for 1990 is 17,000 air traffic controllers and 2,575 flight safety inspectors. These figures do not seem adequate to deal with the increased traffic activity, or the increase in the numbers of aircraft that are being used by air carriers, currently at 5,660 total aircraft (FAA
/:^riministrator's Fact Book. 1990: 16) but growing. These
182 aircraft must be continually inspected by FAA flight safety personnel. The FAA organization itself came into existence early in the second phase of the industry-government
relationship, when competition in the industry was kept nearly static by the CAB. Now, in an environment of deregulation, the old style FAA is simply not capable of
fully achieving its safety mission.
In October, 1986 Congress passed the Aviation Safety
Act (100 Stat. 3341) creating the Aviation Safety
Commission, which was charged with the task of determining
the effectiveness of the FAA's protection of public safety.
The Aviation Safety Commission determined that the FAA was not well equipped to meet the challenges of a deregulated
environment. The Commission made several charges including
the criticism that typical bureaucratic incentives have
impeded the FAA in its mission. The Commission suggested
that the FAA has usually opted to solve capacity problems by
adding hardware rather than personnel (Martinez, 1988). In
addition, the Commission found that the FAA was affected by
political conflicts arising from their organizational
relationship to the White House, Congress, and the Office of
Management and Budget-
Conclusion
Essentially, ten years after the implementation of the
Airline Deregulation Act of 1973, it appears that
183
Kv deregulation has caused continued potential for disastrous impacts on safety. The transition period was much more volatile, and accidents during the transition have causes that are closely related to deregulation. It also appears that the cut—throat competitive environment of the industry has subsided somewhat as mergers and takeovers of failed companies have reduced the number of airlines in the era of complete deregulation- This points to the notion that the original intent of policy—makers, to increase benefits to consumers through greater competition, has also failed.
However, new management strategies have appeared to have much more subtle effects on safety through the reduction of
labor costs- Finally, it seems that not only did policy
makers fail to define the public interest in terms of
safety, but policy scholars have also failed to describe
such deregulatory phenomena or to explain the unique policy
origin or policy processes of deregulation.
It is hoped that this study has shed some light on the
issue of air transportation safety; it is also hoped that
this study has provoked additional thought about how policy
scholars analyze deregulatory policy. In addition, this
study has suggested that regulatory theories are adequate tt
explain deregulation, if such theories are expanded to
include the way economic regulations and deregulation have
social effects on the public-
184
-F>inniHHi^CN No doubt, this research has been limited, as all research with small data sets is limited, by its inability
to find strong statistical significance for the affirmation of the hypotheses. However, systematic analysis provides
evidence to suggest the conclusion that air transportation
safety is more risky now, and that airline accidents have
been caused by factors arising out of the competitive
environment of the airline industry since deregulation- One
thing is clear: both regulators and deregulators must be
ever vigilant lest unintended consequences trump the
intended ones-
135
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