Alfred Kahn, policy intellectual who drove US deregulation, passes away

Posted on December 29, 2010  /  1 Comments

While he was teaching at Cornell, Alfred Kahn noticed that airfares were lower and frequencies better in the San Francisco-Los Angeles route than in other route pairs in the US. The difference was that SF-LA were both in California and were thus outside the authority of the federal aviation regulatory agency. When President Carter appointed him to head the regulatory agency, he proceeded to abolish it.

This was one of the main contributory factors to the spread of liberalization of network industries, including telecom, throughout the world.

Kahn was former chairman of the Civil Aeronautics Board, and he presided over the deregulation of the airline industry — the dismantling of a system that regulated where airlines could fly and how much they could charge.

“I am very happy about the intensity of competition in the industry,” Kahn said in an NPR interview in 1986. He said then, and would continue to say, that competition had one effect: empowering the consumer.

“Uniform low fares to all comers, no restrictions, no advance purchases, no staying over a weekend, has been a very powerful influence in bringing travelers the benefits of price competition,” he said.

Richard Aboulafia, an aviation analyst, says Kahn’s influence was felt far beyond the airline industry.

“A lot of people regard Reagan as the architect of deregulation for so many segments of the economy,” he says. “Yet, in terms of meaningful transformation, it happened under President Carter with Kahn’s actions.”

Those actions brought cheap travel to millions. The sacrifice? Comfort. That was something Kahn freely admitted.

But for Kahn, flying five hours with only a tiny bag of peanuts was better than not flying at all.

LIRNEasia salutes Alfred Kahn, policy intellectual.

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