“This is the free market at work, and we’re not used to it,” said Mo Garfinkle, a lawyer and a longtime airline industry consultant. “The idea of deregulation was to allow entry, whether it was successful or not.”
Mr. Garfinkle, who has advised many airlines involved in merger talks, says he believes that the industry is only now winding up the first phase of deregulation, in which industry practices had to be established.
Indeed, the federal government still regulates safety and the air traffic control system, and it steps in whenever either seems threatened, as passengers were reminded when American, Southwest and others grounded hundreds of flights this past month to reinspect aircraft.
On Wednesday, the Transportation Department announced two ideas for solving perennial delays at La Guardia Airport. One would call for the government to reduce the number of flights; the other would have airlines rein themselves in by selling some of the slots that give them the right to fly there.
Both ideas, now up for discussion, are meant to encourage growth by new airlines, which might otherwise have a hard time establishing service from La Guardia, said D. J. Gribbin, the department’s general counsel. “If you block out a market, you block out competition,” Mr. Gribbin said. “This benefits new entries.”
Beyond that, the next phase of deregulation will take place when airlines are truly globalized, flying freely inside other countries’ borders as well as their own, Mr. Garfinkle said. The merger between Delta and Northwest would be a major step toward that end, given their broad American network and extensive list of cities in Asia, Europe and elsewhere, he said.
However, the prospect of American carriers trying to compete against healthier foreign airlines, some of them still government-owned, is daunting to James L. Oberstar, Democrat of Minnesota, who heads the House Committee on Transportation and Infrastructure.
“It’s a very bad idea,” said Mr. Oberstar, whose state is home to Northwest’s headquarters. He said he expected “a cascade of carriers finding partners” if the Delta-Northwest combination is allowed to go forward, leading to fewer choices and higher prices for consumers.
Even if that happens, Mr. Garfinkle says he doubts that Congress will take up any serious re-regulation efforts. “You’re not going to re-regulate fares, and you’re not going to re-regulate service,” Mr. Garfinkle said. “It’s not something where you can be half pregnant.”
But Mr. Rose says members of Congress will have to discuss re-regulation, if only to seem as if they are looking out for their constituents’ interests. No city or state with an airline hub wants to see it vanish.
“It’s like losing a major league ball club,” he said. Airline hubs are “the kind of things you need to be major league, for your corporations and for yourself.”