A Note on the Legacy of Airline Deregulation

April 18, 2017

Airline customer service has been much in the news this week, and not in a good way.

Since the federal government stopped regulating the fares that airlines could charge and the cities they had to serve, the seats have gotten smaller (as the size of the average American hindquarters continues to grow), the amenities have gotten fewer, and the near-100-percent load factors make flights feel more claustrophobic.

In that light, it is important to remember a fundamental economic truth: you get what you pay for, and airfares cost a lot less in real terms than they used to.

In 1980 (the last full year before deregulation really started to take effect), the average worker had to work 32.7 hours to be able to purchase the average round-trip airline ticket. Four full work days.

In 2016 (based on average airfares in the first half of the calendar year), the average worker only had to work 17.1 hours to be able to afford the average airline round-trip airline ticket, about half the number of hours required to buy a regulated ticket. (This despite stagnant real wage growth, which makes the fare cuts even more remarkable.)

The dataset used for the average round-trip airfare includes average bag and change fees (the “all-in” fare) and can be viewed here. The hourly wage dataset is the average hourly earnings of private-sector, non-farm production and nonsupervisory employees on July 1 of each year and can be viewed here.


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