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Airline De-Regulation, United Airlines, and YouTube

Summary:
Reprinted from GaryNorth.com The American airline industry was de-regulated in 1978 under President Carter, not Reagan. This forced airlines to change. From this time on, they had to meet customer demand. They were no longer protected by federal law against low-cost fares. The corporate culture of the airlines could not adjust. There was an exception: Southwest Airlines. It had its origin inside Texas, outside of federal price regulations in its early days. Its routes never crossed state lines, so it was not under the Civil Aeronautics Board’s rate price floors. When deregulation came in 1978, Southwest’s competitors went bankrupt, one by one. They had been designed in terms of federal regulation. They could not compete in the new price competitive environment. Southwest could. POSTER

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Airline De-Regulation, United Airlines, and YouTubeReprinted from GaryNorth.com

The American airline industry was de-regulated in 1978 under President Carter, not Reagan.

This forced airlines to change. From this time on, they had to meet customer demand. They were no longer protected by federal law against low-cost fares. The corporate culture of the airlines could not adjust.

There was an exception: Southwest Airlines. It had its origin inside Texas, outside of federal price regulations in its early days. Its routes never crossed state lines, so it was not under the Civil Aeronautics Board’s rate price floors. When deregulation came in 1978, Southwest’s competitors went bankrupt, one by one. They had been designed in terms of federal regulation. They could not compete in the new price competitive environment. Southwest could.

POSTER CHILD OF REGULATION: UNITED AIRLINES

In 1970, United Airlines’ slogan was “Fly the Friendly Skies.” It was meaningless. Robert Poole wrote a classic essay that year for Reason on the need for the de-regulation of the airline industry. The title: “Fly the Frenzied Skies.” Read it here.

In 1979, I wrote an article on free market competition. I also selected another United Airlines’ pre-deregulation slogan: “You’re the Boss.” When United adopted that slogan, customers were not the bosses. Federal bureaucrats were. In 1979, that was no longer the case.

United never made the adjustment. UAL declared bankruptcy in 2002.

The company has received continuous coverage for this video. A passenger is being removed from the plane. He refused to comply when told to leave.

There were multiple videos recorded and posted. One or another video was picked up by newspapers and TV shows around the world. For examples, click here.

This led within hours to this spoof ad:

Airline De-Regulation, United Airlines, and YouTube

United Airlines’ official position, according to statements filed with the federal government, is that its seats are guaranteed.

It turns out that the now-notorious flight was not overbooked, as UAL had originally announced. The airline wanted to offer transportation to a flight crew for an associated regional airline. This saved UAL a four-hour rental car drive.

This lawyer says UAL broke the law.

Naturally, senior management apologized. This was after the videos started going viral. Too late.

This is old hat for United. There are several videos from the past on such treatment. Go here.

United became famous for this video, produced by a man whose guitar was destroyed by United. United refused to replace it. I have posted it before, but you may have missed it: “United Breaks Guitars.” It has had 17 million hits.

They begged him to take it down after a million hits. He refused. Then he did two follow-up videos.

UAL management keeps forgetting about smartphones and YouTube. They are not alone. Bureaucrats everywhere have yet to come to grips with smartphones and YouTube. They do things their way until they pull off a stunt like this.

Bureaucracies, both public and private, are no longer able to act with impunity. YouTube and smartphones have changed the rules.

The British navy has long been described as an institution designed by geniuses to be run by morons.

United Airlines’ senior management is not made up of geniuses. The employees act like morons.

CONCLUSIONS

The recent videos are a reminder of who is still the boss at United: customers.

The free market is alive and well. YouTube is an aspect of this. So are smartphones with video cameras. The decentralization of technology produces liberty. It also produces ways to get bureaucratic policies changed.

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Gary North
Gary Kilgore North (born February 1942) is an American Christian Reconstructionist theorist and economic historian. North has authored or coauthored over fifty books on topics including Christian theology, economics, and history. He is an Associated Scholar of the Ludwig von Mises Institute.

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