Alfred Kahn has passed away.
As you travel during the holidays, shopping around for cheap airfares, you have Kahn to thank. Kahn, a Professor at Cornell, was responsible for deregulating the airline industry.
I realize all you kids think airfare competition always has been a fact of life, but before Kahn government regulation restricted new entrants and maintained artificially high prices. Let this be a lesson for government regulation of our health care industry and the internet.
From The Wall Street Journal:
Alfred E. Kahn, who presided over the historic deregulation of the airline industry during the Carter administration, paving the way for JetBlue and other low-cost carriers, died Monday. He was 93.
Kahn, an economics professor at Cornell University, died of cancer at his home in Ithaca, N.Y., the school said in a statement. University spokeswoman Claudia Wheatley confirmed his death.
A leading scholar on public-utility deregulation, Kahn led the move to deregulate U.S. airlines as chief of the now-defunct Civil Aeronautics Board in 1977-78. The board had to give its approval before airlines could fly specific routes or change fares.
“Historically, the board has insisted on second-guessing decisions by individual carriers to offer price reductions,” Kahn said in early 1978 as so-called “super-saver fares” swept the industry. “During the last several months we have been abandoning the paternalistic role, leaving the introduction of discount fares increasingly to the management.”
President Jimmy Carter embraced deregulation as a means of stimulating economic growth. Kahn was largely instrumental in garnering the support needed to push through the Airline Deregulation Act of 1978 — the first thorough dismantling of a comprehensive system of government control since 1935.
“I open my mouth and a fare goes down,” he quipped to The Washington Post in 1978.
CNN describes what it was like to fly pre-Kahn:
Kahn spearheaded the U.S. Airline Deregulation Act of 1978 when he chaired the now-defunct Civil Aeronautics Board.
At the time, a coast-to-coast ticket cost an exorbitant sum of money and no new airlines were taking flight.
Airlines such as Pan Am, Eastern and Braniff ruled the skies, and the aeronautics board governed them, controlling routes and ticket prices, keeping fares high and eliminating competition.
“Nobody could fly an airplane commercially on any route without specific permission from the Civil Aeronautics Board, and price competition, cutting prices, was illegal,” Kahn told CNN in 1998, recalling that period.
More at The Cornell Chronicle on the personal side of Kahn, including his wicked sense of humor:
Kahn was not only well known as a brilliant economist but also as an irrepressibly candid wit. Attacked by airline industry executives for not knowing one airliner from another, Kahn, a leading exponent of marginal cost theory, readily conceded, quipping, “To me they are just marginal costs with wings.” When the administration admonished Kahn for alarming the public that the country could face a “deep, deep depression” if Carter’s anti-inflation policies failed, Kahn thereafter used the euphemism “banana” for the word “depression,” which he later switched to “kumquat” when a large banana company complained.