Transcripts For CSPAN3 Ganesh 20240705

Animus that really brings it to life. This is the latest in columbia series on markets where we discuss problems, political economy and how to solve them. I want to start by noting that his book is brilliant, and its brilliant because. It touches on problems that are so implicitly obvious to all of us. Im sure everyone in this room has felt frustration. An airline categorically. It feels like air travel has somehow even worse. Were offered less space and stuffed amidst more seats. Were given less food and charge, more fees. Were extended longer delays and offered less destinations. Everything that should have grown has shrunk and everything that should have shrunk has grown. Our planes have inverted and too often it feels like were flying upside down. And these problems with Civil Aviation emblematic of larger problems with our own country all over our infrastructure feels dysfunctional and our Technology Engine and the conventional interpretation of this fact is these are somehow merely automatic inconvenience, as in ancient and eroding industries. But of course, this isnt True Aviation isnt an ancient field. Its a young one. In fact, for most of human history, it wasnt believed man flight could even be accomplished. It was plummeted precisely because he dared to fly. Nor was this just an ancient prejudice. As recently as 1897, the Washington Post definitively concluded it is a fact that man cannot fly. Well, if that was a fact it wasnt a fact that the Wright Brothers found very convincing and six years later, they emerged the dunes of kitty hawk, half man birds. And for much of the 20th century america, the nation that was the first to spread its wings made dramatic on all frontiers of flight, we saw advances by argonauts astronaut suits and aviators. We watched great people up from earthly stars, people like lindbergh, hughes and armstrong. We built aircraft carriers and launched americans into space. These were years of progress and plenty. These were years of pride. But something terrible has happened. The intervening years. Weve lost our way plans have become ambitions. Ambitions have become dreams. Supersonic has slipped into subsonic. And subsonic has slipped into stagnation. And in december 120 years after kitty hawk, too Many American passengers have their Flights Canceled, delayed and downed. Sometimes it feels as if the Washington Post had it right the first time. Maybe men cant fly, but i hope no one in this assemblage would agree with that sentiment. We can fly. Weve long since accomplished the technical challenge on all we have is a political economy problem, a problem that can be solved by the in this room, a problem perhaps with answers. This book indeed, this book often reminds me of those words from tennyson. Some work of noble note may yet be done. Not unbecoming men that strove with gods made weak by time and fate, but strong and well to strive to seek, to find and not to yield. Thank you so much, everyone. Join me in welcoming our two advisors. Its. Well, thats always a hard act to follow, sir, but thank you for the thank you for the introduction. Im going to lead our discussion. Im tim wilks from here at the law school. And obviously i can ask the author is with us. I wanted to mention that the books are available outside from book culture whos come up with a big bundle them if you wish to buy. There may also possibly be my book there as well but the by the same publisher columbia global reports. So why dont we get right into it you know what you know lot about a lot of things you talked about a lot of topics inspired you to write this book. So im someone who flies a lot and, i think like anybody who flies a lot ive had my share of frustrations and miseries with the Airline Industry. But like tim, you know, im also a law professor and. I write a lot about Economic Policy and regulation and so i was working on a textbook with some colleagues and was writing the Airline Regulation chapter. And as i dug into the history of Airline Policy and law what i realized was that all things just about that make flying miserable, frustrating, irritating, problematic are a function Public Policy choices. And the biggest Public Policy choice in this area was the decision to deregulate the airlines in 1978. And so when i was doing work, it just struck me that this is a story think people dont really know they dont know how we got to where we are today, what really happened. And thats what tried to uncover in the book. Why dont you tell us a little bit of that story . So if people havent the book yet, you know, my understanding of it, i have read the book, but the very brief ideas, of course the airlines were new airplanes were, new obviously not regulated at the very beginning. Then there became to be regulatory system, which was so undone in late seventies. So why dont you walk us through that story little bit . Yeah. Yeah. So so if we put those early years from Wright Brothers into, into the 1920s, theyre really few big eras in history as a country in dealing Airline Policy. The first is from the 1930s to the 1970s. And i like to think of this as the era of stable, Reliable Service and what congress wanted to do the 1930s was ensure that we had air travel everywhere in the country because they saw it as a critical transportation infrastructure that was important to linking small places, medium places and whats geographically a gigantic space that we have. And they also wanted to make that the Airline Business would be competitive, but not so competitive that the airlines all go bankrupt or need subsidies and not so uncompetitive that they would become monopolies or oligopoly in any city or overall. And so they created a federal Regulatory Agency called the civil aeronautics, and they tasked them with managing a system of regulated competition in which the Civil Aeronautics Board or the allocated routes to specific airlines to fly from place to another. So some airlines as an airline, you would get some routes that were too low volume places like alaska and some were on high volume routes to they also regulated the prices of airlines in the early days to try to wean the airlines of government subsidies and then ultimately they tied prices mostly to. So the longer the distance you flew, more you paid and that system worked reasonably well through that time period. There were challenges certainly but during that period more and more people were flying, prices were down consistently and there were some big innovations like the shift from propellers, planes to jets, from jets to wide jets. And then by the 1970s, real competition over service actually, including some kind of service competition, at least as we might think of it today. My favorite example is that there were actually piano bars in some airplanes, not in the airports, in the airplanes themselves. And i dont know where you could fit a piano in an airplane, but i looked at some the pictures and and i say, its crazy. But i was looking at the Economy Class Like American Airlines lounge. And, you know, on the airplane were pretty good. It made me feel like our civilization, civilization is kind of gone downhill or, Something Like that. But what what drove the impetus for change and towards deregulation . I think youre going to see follows. Yes so i think there are a few things. The first was there was a real economic crisis in the 1970s, a combination of high Inflation Oil prices demand went down for passenger travel. So there was this economic context that shifted. The second thing was there was a set of intellectual shifts that happened in that time period, largely driven by economists who the airlines were not a kind of public utility, a infrastructure. They werent a different kind of business. They were like all kinds of businesses. And as a result, operate like other businesses in a kind of competitive system and the system we had of regulating competition said was more like a cartel and that thats bad and we should get rid of cartels. And so their pitch was we could have a much better system if we Just Airlines fly wherever they want, whenever, want and charge whatever they want. Can interrupt you when you say who was the day and this in this case. Yeah. So its a really Interesting Group of people making this pitch its a mix of conservatives who you know maybe predictably were against Big Government regulation. But a lot of the real driving forces are actually liberals. A combination of consumer like ralph nader and also, you know, kind of classic old school liberals like ted kennedy and his main advisor at the time Later Supreme Court justice, stephen breyer. And so this combination of liberals and conservative economists pushing this idea that, you know, if we deregulated the industry, we could have dozens of airlines operating. One person even suggested up to 200 airlines operating competitive lean and there would be real no no real downsides in this system. And so that was their pitch and it was a good pitch. And so Congress Took it up. And in 1978 deregulated the industry. You know, what was the most charitable version you can give . I know you think deregulation has not gone as hoped, but what is the most charitable version you think of the goal or what they thought they would accomplish . Im saying that senator kennedy and stephen breyer, when they saw what you know, what they hoping would happened, i, i think the most terrible way we could think about this is that they thought that if we massively increased amount of competition and the number of players in the Airline Industry, we would lower prices because there would be more competition and. We wouldnt lose that much in terms of the quality of service or the Locations Service or congestion or or any of the other downsides that that weve seen over over the decades. I think the challenge with that was in a lot of ways, their assumptions about industry werent right and. And a lot of the people who pushed for deregulation, maybe not a lot, but some at least who pushed for deregulation admitted this years later that they had been wrong in their understanding of the industry in critical ways, and that as a result didnt predict happened afterwards. Yeah. So i guess tell the saga i take as well of relatively wellmeaning. I dont think you think this was a feeble conspiracy to to make seats smaller and. Lets im wrong about that but it didnt go as as well one of the things you say in your book, you say that the american tradition of regulated was built on the understanding that some sectors of the economy were like others. What was it maybe that they got wrong or what makes the Airline Industry different, other industries . Yes. So this idea goes back really hundreds of years in law and policy that some areas business are different than others and the reason theyre different is because theyre unlikely to be very competitive. And so in some areas you have really high costs, which just means its expensive to get into the business. There are effects or economies of scale which basically means that the bigger you are, the better off you are. And the more of a network you have, the better off you are. Easy example of that is, you know, a telephone would not be useful at all if theres no one else who has one. If youre the only person who has one. But if that network is really big, the bigger it is, the more valuable it is because you can call more people, right . So thats a of a network effect. Some areas have barriers to entry. Its hard to get into the business. Cant just start an airline it turns out you also have to have a place to land their limited number airports there are limited number of runways limited number of gates and cant have everybody landing at once. You know you can have 100 restaurants on the same street. Were here in new york. There are really streets. There are lots of restaurants on. They can all compete with each other. You cant have hundred Different Airlines landing their plane at the same on the same runway. They will crash each other. This is a real problem. Its a constraint. So there are these barriers that come up as well. And what people for a long time is in these industries youre highly likely to get either a monopoly or an oligopoly, which is just a of mystic way of saying a small number companies, not just one who are dominant and in those systems, you need a different kind of to prevent all the bads that come from the concentration of power into a very small number of firms. And so thats why they thought regulation was necessary and. What the regulators said was actually they were wrong about some of this, but they didnt think there were economies of scale in, the Airline Industry. They didnt really take seriously Network Effects. They thought that this was an area that didnt really have barriers to entry and that anyone could just start an airplane and i think when you read some of their comments from then, they are wellmeaning, but it just sounds when you them now it seems shocking how wrong they were right so you know, i take it from your book that we have the title, your book, why flying is miserable, so i take it you dont feel this was a Great Success . The deregulatory and you said some of what the assumptions were wrong, but what really went wrong and in practice, whats gone wrong over the last 40 years or whatever time period you want. Yeah. So, so what happened after the deregulation act in 1978 is we didnt end up in this dream world of competition where everything was better. We ended up in something more like the hunger games. It was. Yeah, it was. It was a i mean, it was a cutthroat period of competition right away where. There were a lot of new entrants coming in. There were airlines called new york air and people express and they were offering really cheap fares, no frills, no meals, just peanuts. Thats how we got to peanuts airlines. There was a campaign called just thats what the fares were. And they came not on those low volume routes flying to alaska or to rural places, but in high volume places where they could make, you know, a lot of volume and make money and for these airlines that were coming in, you know, trying to really undercut the big guys on cost, at first that seemed like a good thing. But the big airlines fought back and they had a lot of weapons that they could use, too, in this hunger games. And that meant pricing even below the new upstarts, it meant sandwiching flights. So, you know, imagine you have a flight at 10 a. M. As a new airline. Big airline would come in and have a flight at 958 and 1002 going to the same place and. Who wants to fly the airline that has so few flights when you could fly. The bigger airline for cheaper with Better Service where theres more flights per day. But that meant the Smaller Airlines went out of business. And so you had dozens of bankruptcies mergers in this period. And by the end of eighties, we have reconsolidation back into the same big airlines were dominant in the regulated period but just without regulation and so that was that and i think whats happened over the decades weve gotten even more concentration. I would say now were in Something Like a period of monopolistic capital where you really have very, very little competition, deep concentration in the industry not just overall where the top four airlines have a larger market share. They did in the 1970s, but also, concentration at airports, you know, in some airports in the 1970s, only 20 of the airport would be one airline that would be the most dominant. Now its 70 . Its its huge amounts. So theres less competition even if youre flying to specific places. And thats to some big cities. Atlanta dallas, charlotte. And so think thats where we are now, a place where we have few choices. Well, let me try and pin you down on this and how you feel about competition, because i feel its a key question i feel many members of our audience or people watching might and naturally, instinctively think the competition in airlines is good. You know if you have one carrier on a route or two carriers, theyre going to match prices, charge whatever they can get away with. So, you know, i think the sense competition might be bad is is very counter intuitive. So i guess im trained in the Justice Department right now is trying to stop a merger between jetblue and spirit on the basis that it would destroy competition. So i guess im trying to pin you down exactly what saying about competition, too much competition about. Too much. Where are you really on Airline Competition . Yeah. So this really goes back to this distinction where some are different than others. If were thinking about making coffee mugs or a restaurant, you can have competition where we can expect might be dozens of restaurants, hundreds of restaurants even in a in a city big enough and they can all compete with other but in these sectors where theres a move toward clean solid nation to have really requires a fair bit of regulation in order to maintain it and thats what we had in the regulatory period. There was competition, it was regulated competition, but it was competition, right . We have less competition now than we did then because we deregulated and you dont its these in these areas, choice isnt open competition or regulation. Its actually regulated competition or massive consolidation and no competition. Right. And thats because of these underlying economic dynamics. And so to me, the question is not can we just have competition without regulation its that in these sectors, if you want any kind of competition, you also need regulation to make sure that happen. But youve painted a somewhat positive picture of the seventies, sixties and seventies. But i feel like i often come across, you know writings or or people saying that, oh, you know, the problem was the old days it was just so expensive, you know, and the the Civil Aviation aeronautics board determined prices per mile. It was kind of the Central Planning sort of like soviet style and thats why you had these piano bars a too much going on and you know okay well you know, flying might be miserable right now, but at least we have free, free prices and you can have an airline like which gives you absolutely nothing but is rock bottom of you are being bought jetblue but whatever you know have this freedom and prices so do you say to the critics who say you know those the bad old days thats it was expensive and only available to the americans. Its a great point. One of the things you hear from a lot of people is, well, prices went down after deregulation. And its true if you look at the chart starting in 1978, youll see prices going down consistently. Now, if you move that chart back 1950, youll see prices down consistently the whole time, just about the same rate. And so theres this where Airline Deregulation didnt actually lead to kind of massive drop in prices, average prices overall. We had declining prices over time. And this partly makes sense because, you know, as as our introducers, you know, airlines are not in the ancient industry is a new industry. And even in the 1950s and before the faa, which was created, the federal Aviation Administration in the late 1950s, there were a lot of safety challenges. I mean, there were plane that were happening midair plane. And so that is a thing that deters people from flying. So so you got more volume as we safer airplanes you had more growth in the industry you had cheaper cost time and weve seen that consistently as as things go on. So i do think yes there were higher prices, but prices were going down that whole time, going down afterwards. You know, to the other points about the bad days and the good new days of price competition, i find it a little bit of a weird argument because. Ive actually never met a person who said to me, i just love that i paid extra to pick my seats. It was amazing when i paid more to check my bag didnt you just have a great experience with paying them more for checking your bag . I had a great one with that that no one says that people actually like the system that we have. They dont like the smaller seats, they dont like. When you have a plane that has lots of seats in it. But they say when youre about to board but we only have space for bags in the overhead compartment. So youre going to have to check your bags here. Nobody likes that. Yeah and the challenges you cant fix it by saying im not going to fly because if you need to go from nashville where i live to new york and you want to get to come to columbia to give a talk im not going to walk. It takes too long and and driving takes too long. You need to fly and if you dont have choices, you know, the markets not going to discipline that and thats where the competition stuff comes into play again too. You did fly here. Did you have to pay for it. Im doing a bunch of different book events and flying between them. Yeah. So can pick up on my first. On my first flight as we started this book tour, we were actually delayed by more than an hour or so. So i that to be an appropriate start for this for this tour. Yes it would be a sad thing to fear. Flights all end up getting canceled. Cant do cant promote your book. We like conspiracy. Well, why dont we talk a little bit about the about bailouts and of the things you write about in the book is the pattern the airlines seem to have established of you know when crisis strikes. Turning to the federal for money. I think most recently during covid you cant remember the number but over it over 50 billion during covid and the condition that they i not lay anybody off but why dont you tell us about the bailout pattern. Yeah so thing thats happened since deregulation is weve moved into a system where the is really in this kind of boom and bust. There are areas where the Airline Industry is making money hand over fist. The nineties the 20 tens in fact in the late 20 tens one Airline Executives said that he didnt think theyd ever lose money again. Right. But then there are these crises, these big demand, where people dont want to fly 911 covid. And in moments, the Airlines Come to congress and they say, we need help, we need a bailout after 911, we need a Payroll Support Program after covid and so we have this situation, which is not unlike banking almost where the airlines are too important to fail. They are in a place where if we rescue the airlines when theyre in crisis, they may lay off thousands of people, which is not only devastating for those people, and it definitely would be, but it also means that when demand comes back up and when people want to fly, there wont be people to fly the planes or to service the planes to be flight attendants or other employees who work in the industry. And you cant just start a job in the Airline Industry. They cant just hire somebody off the street you know, to be a pilot. You actually do learn how to fly a plane and you have to have a lot of hours doing that so you can do it safely. And so theres a lot of skill and training in a whole bunch of these jobs that mean cant just pop back up when theres more demand. And so to me, in a way, this is real proof that this is an industry that is a kind of public utility because its so important we, have to rescue it in these crises moments. Right. You know, thats not true of a lot of other it is true of the airlines, of their systemic importance and so what happened in in the covid situation is exactly this. You know, the airlines are in a place where theyre going to have to layoff of people. And so we passed this package, which i think is very important to saving those jobs, to preventing this big crisis that we would have had. But the airlines of skirt the spirit of the law also while offering voluntary retirement packages and last year we still did see shortages and cancellations delays and and fewer flights than we needed because of this. They didnt bounce back with kind of a bounce that we needed. I think yeah. I think one of the things that struck me, as you said, they didnt fire anybody, you know, they said they wouldnt fire anyone in exchange for how many how much was it . 50. Yeah, they. 54 billion. And then they said it wouldnt any money but they found ways to have people retire anyway so they didnt have staff when they it. Which struck me i think as you said but you know, it struck me i think about that bailout or the airlines extraordinarily profitable over the 20 tens partially through the baggage fees and change fees if memory it made billions of dollars that can very profitable industry. But why didnt they keep that money for for for lean times or what happened to that money that was made during the 20 tens when they were in the most profitable such they would need so much money when things went. So instead of having a kind of Rainy Day Fund for when there was a big crisis there were things like stock buybacks instead and that meant theres less money available for when the crisis hits to have a sense of how much stock buyback im sorry, i pull it out in the book in my head, but i talked about it in the book with almost 100 trillion and i should not get the numbers wrong, but i was shocked and i remember looking into that at at some point. Yeah. Let me ask you about, the contemporary business model. So youve said a few things are reliant on government bailouts, innovation in the industry has gone left towards building supersonic jets or faster or more convenient and to trying to figure out how to shrink seats and, squeeze more of them into an airplane thats been like intense focus. But also write about the quote from your book that airlines have from wall street that finance can be more profitable than industry and that now operate like banks. Heres what you meant by that. Yes. If anybody, a airline branded credit card in a way, you know what i mean . These card programs are longer like your local shop or sandwich shop, where you buy ten sandwiches and get the 11th one free. Theyre not frequent flier programs really anymore. Theyre actually a credit card spending programs where its really about how much money you spend, not about, you know, how much you fly and, whats happened over time as evolved over the decades, is the airlines have created these systems where they create all these points really out of thin air. They work with credit cards or. Credit cards make money off of swipe fees from the retailers. And for the airlines, its a great you want to fly on their airline rather than flying on their competitors. So in that sense its anti competitive and people in the eighties actually were very upset about this they thought this was a real anticompetitive when they created these programs. But its also a place where they have a lot of flexibility over how these point systems work. They can devalue points. So maybe today using to fly somewhere it costs 30,000 points, but maybe tomorrow cost 50,000. Well, you know, those points that youve accrued are now worth less when you try to redeem them. And so i think what weve seen is that those points systems have changed in some ways thats another place for airlines to be able to kind of with Credit Card Companies and banks to to make money and to keep more business, even though it may not always be better off, better for for passengers or consumers. You make the points sound more like a cryptocurrency than its a reward program. Its an issue more you downgrade upgrade them. Yeah. Yeah. I mean in a way theres theres odd thing because theyre created by the airlines. Right. And thats you know, usually when we think of something thats like a currency its created the states by a government. Even in our Banking System thats, how it works, you know, the government is the one that creates sovereign money and we just outsource that process to operate through banks. And thats thats how our Banking System works, too. But is very different where the airlines have just created this effectively currency and they decide you can spend it on. Does this help explain some of the downgrading that everyone got very upset about this fall at delta, maybe other airlines where theyve given on miles as the, you know . Exactly. Yes. Or earlier this fall, delta explained that they were going to change their make it harder to get some of the best levels of status. And that and then also downgrades some of what you get for your status. And so people were pretty upset about this the head of delta then backtracked a little bit not totally but a little bit amidst the outcry but theyre still moving in that same direction. One last thing about the contemporary model before we move to solutions, which is you write in the book also about the issue of common ownership, horizontal shareholding. Theres other, which is further, i think you suggest in fact competition. The airlines can explain thats about yes, there have been some studies from economists that show that when there are in common for different businesses and this is called common ownership, that the businesses dont need actually collude, they the ceos dont have to call each other up and say, hey how about you raise your prices tomorrow and ill raise prices tomorrow . They dont have to do that. They understand that because their is similar, its actually beneficial for them to not compete as much and that implicitly get the same kind of anticompetitive effects because its as if theyre owned by the same entity. And so theres economists have shown that this raises prices. There is law who have argued that this is a violation, the antitrust laws and. You know, i think this is another aspect of whats happened in this industry that moves us in this direction. More monopolistic capitalism. Sorry to interrupt you. So the idea is that because, you know, say American Airlines and united actually have the same owners at some level, theyre just not as interested in really trying to compete with each other. Its kind of like pretending to compete. Yeah, thats thats the idea that, you know, and if you think about it, its of make sense. We can simplify the example and say if one entity owned two Different Airlines, 100 of the ownership of two airlines, why would they want to with each other . Because would be competing away their own profits and gains. Who are these entities that own all the airlines institutional investors. Yeah you know like blackrock and so on in vanguard which is some of us here. All right. Well, why dont we turn to solutions . We take any possible solutions. Now, you see in the book you propose you have a number of possibilities that you throw out there which range, i guess, from the bigger to the smaller. So one is you propose one possible is to embrace the fact that the Airline Industry tends consolidation. Thus you suggest or think a possibility that air travel should possibly even be a nationalized monopoly or some kind of a single system. Now, many people sort of reflexively think monopolies are bad things. Im curious about how about that . As a possible solution . Yes. Part of my goal in the book was to try to expand our imagination for how we think about regulating airlines and, not just focus on, well, we need a bill of rights with a laundry list of 15 things that were upset about because if we do that, what well end up with is next year. Therell be some other thing were upset about and the year after something else. And well be playing this whacamole of trying to fix all these little things. And so i want us to think bigger and some of the first ideas i explore, i think are probably infeasible in United States, but exist in other countries and the idea is to take seriously these questions that some businesses are different than. Others, if we really cared about efficiency and scale and Network Effects, then the most efficient, biggest Scale Network approach would just be that one airline. I dont think were going to do that in the United States. We but we could it would be a possibility. Some countries have National Carriers in the past in the united, weve had a single provider, the bell system in the telephone industry was was one of these in the mid 20th century. And that was a regulated private company. So so we have this model that exists in some places. But one of the downsides, of course, to a unified actor is you dont have any competition and you might expect could be less innovation. There could be more sclerosis in the in the entity and to me i then move to a number of solutions of how we might get to the second. But just playing with this regulated monopoly. We know there is amtrak as that way there countries that have Passenger Carriers and dont have other carriers that has worked well. Yes. So, you know, i was talking to somebody, you know, theres lots of different models around the country, around the world. And one of the challenges is that there are different consequences in the different models in some places. I was talking to someone yesterday who said, you know, ive taken state run carriers in some countries and others. Some of them are the best flights ive ever taken in my whole life. You know, singapore, the person said they really liked, but state run carriers have been terrible experiences and theres a challenge where in Different Countries we have different experiences this. So i think its hard to conclude one way or the other on just that fact. And singapore is relatively country. I think thats probably of the reasons. Yes. So some of the alternatives talk about are a public option or a regulated competition. Maybe you could talk those those would work out. Yeah. So the public option idea, we should imagine a system where we take scale really seriously and we have public provider and, a private provider, just one of each. And australia actually had a system like this before, they deregulated their Airline Industry, it was called two Airline Policy and they flew to similar places under similar terms. But the idea is the public option makes sure that the private actors arent price gouging and private option makes sure that the public actors keep their quality of service up. And so you get some benefits of both, though with a lot of scale and not too much competition, youd have sort of an air america thats not a Radio Station or Radio Network that flew and run by the government, flying in competition, i guess. Flying everywhere, flying flying, flying everywhere. And they would by their very existence kind of force. Keep the private carriers honest. I guess that would be the vision i. Guess if if the airline were here, theyd say, well, thats not fair because they dont have to make a profit. Theyre supported by the government. Theyre you know going to undercut us or, you know, just provide unfair competition. I wonder what youd say to that i mean, this goes back to the basic questions that we talked about earlier. You know, how do we decide we want to organize competition in this industry . And you could devise a system in that case, you know, in the australian case, where there regulated rates, you could do that if you wanted to. You can also not do that and have more competition on prices. And i think the question all really about the design and, you could imagine having quite Profitable Airlines in that context, private ones and them competing with the public airline. If you had, you know, shared prices. But they would compete on service quality, for example. Are there other places, america, where youve ever used a public idea . Well, i mean, the thing thats about public options is we actually have them everywhere in america. We just dont think of them that way. I mean, we think of health care as a place. There is a debate over public options, but, you know, there are Public Schools and there are private schools and there are Public Libraries. Private libraries and public parks and some people have a swing set in their backyard. Their Public Private golf courses. There are public and, private swimming pools. And we have public options all over and people actually really like Public Libraries and public parks and all of these things too. So i think theres theres a lot of places where we do have things that work pretty well for a lot of people maybe you can somehow a park the National Park service run the airline and it would fly like into the National Parks. And you build the airlines the airports, the National Parks, you get the land. And i of see this coming together. You get like fly these 70 acres skiing there for a while. So i kind of like start to believe in air america. I mean, you can run it. Thatll be good. All right. Have i missed out on some of your other possible solutions . Public option, regulated competition . Yes. So to me, i think the place thats most feasible is for us maintain a system of regulated competition. I think thats probably where we could actually make progress. And to me, theres really three principles that i think we should have as we think about policy in that direction. The first is no more flyover country. I dont think we should have a system where. There are lots of parts of the country, including smaller and midsized cities that dont have access to air travel, and thats where we are right now. 74 cities have lost Major Service from one airline, at least. And since pandemic, there are cities like dubuque, iowa or toledo that actually have zero flights from one of the big four carriers. And i this is a real problem. And so, you know, one thing i proposed in the book is that we think about a kind of nfl draft for geography where, you know, a list of cities of all these places that might a little bit lower volume, dont have as many flights right now and the Biggest Airlines get to pick off the list and we keep working through the list until everyone is served and and they have an obligation to serve those those cities. My second principle is no bailouts, no bankruptcies. You know, i actually want there to a successful, profitable, stable, reliable Airline Industry. I dont think we should have this boom and system. And so way we might think about doing that is actually have an obligation for airlines to have Crisis Management and Rainy Day Funds where they have to think through whats going to happen if demand for six months or a year and how are we going to deal with that . So we dont need to go to congress and we dont need to ask for taxpayer support. And then i think the third principle i put forward the book is fair and transparent pricing. And i think we need to have a much simpler system here where its not the case that when youre sitting next to someone on a flight, youre wondering, did they actually pay half much as i did for my ticket . And when you try to buy a ticket in the first place, youre not confronted all of these different kinds of fare classes and different terms, junk fees, the kind of explosion of things that weve seen in recent. I think we need a much simpler system pricing. Yeah, i keep thinking about this public option idea. Ive gotten into it. I was thinking we do in some ways have a i already have a publicly operated set of airplanes, name of the military. And we do use you know, the United States government when it needs to get serious. Sometimes it gets to the military involved. I remember once in the white house, we really needed baby formula and we got a bunch of military airplanes to go get it from europe or Something Like that. So you can imagine the navy, the air force, navy, setting up other businesses to fly people around anyway, im just getting into that, that idea. I dont think i dont think as crazy as in other words, im encouraging not to back off that one because i think people really like it. And as you said, theres a of public options that people love the fact im not mistaken, you wrote an entire book on public options, right . Yeah. Which i have always found very inspiring for things that are essential services and where you know and some ways to make an argument for it. The airlines might say that, well know this isnt fair being backed by the government, but theyre backed by the government to you know, they also happy to dip into the difference that during the good times, you know, they wouldnt be paying out dividends and buybacks and stuff like that, you know, and it would it would be different run with a different kind of of principles, i. E. Not try to make a profit. Yeah. Itd be more Public Service, which in a way is i think what this industry is, i mean this is an essential transportation for the country and we should treat it that way. Yeah, i guess ill just sort of ask you this, but of all the solutions proposed, which one do you think is sort of the best fit for our current political and Regulatory Environment if you have to choose . Well, i think in the short run, moving toward a system of regulated competition, the principles that i suggested, i think is hopefully the most viable. And the reason is because think there are a lot of people around the country could get on board with those principles. So, you know, we have a system where luckily there are people in every state and every Congressional District who fly. There are people in a lot of red states whove lost service to their towns and communities. Theres people in a lot of blue states who have to pay higher prices because they have hubs that are concentrated. I think theres a real place where this could be a bipartisan area for compromise to actually expand service to places prevent future bailouts or, support programs, make pricing simpler for consumers. You know, thats something that everyone should be able to get behind. Well, youve given me hope about this. I want to leave some time for questions. Well, you first join me and thinking and just. Yes. And congratulate him. So why dont take a few questions and i see one over here. Hillary, thank you for being here with us. So my question is in this industry, we see so many agreements between competitors from interline sharing, even didis. What would you do terms of those agreements that might be seen listed in of Network Effects from the regulatory standpoint or the antitrust enforcement standpoint . Great question. So, you know i think one thing thats interesting, i mean, you mentioned interline, and this is actually an area weve seen the somewhat back off rather than cooperating so just to see what that is. You know, interline, is the idea that if your Flights Canceled or severely delayed and theres an extra spot on another airline that you could fly on that airline. And the idea is that they have a deal on the back end to kind of work that out, but it allows you to get to where youre going on time hopefully or at least without being as delayed or as canceled. And this is a thing that happens a lot actually now than it used do. So this is a place where theyve moved away from that kind of relationship, that could be better for travelers, i think. On the other questions, you know, one thing that weve seen is theres lot of Different Airlines that have really consolidated into these systems and theres different standards. So if youre flying an airline looks like its american, you might not actually be on american. It might be operated by a different airline, but they have a partnership and a deal. But theres sometimes different and, you know, pay for workers, for example. And those are places where i think we could we could do more to think about this as a system and from a competition. You know, i think this goes really back to basic questions i talked about before. I its a pretty unlikely were going to get a that you know the deregulation imagined with 200 airlines operating competitively. And so the question is how do we get to a place where we have more competition but we make that that competition is real, which i think we dont really have right now. I saw a question in the frontier. Go ahead. Yeah all think i push the button and turns out that i got two questions. One is do you think european regulations any better in terms of the service . And two, were in this whole scheme regulating airlines. Does the the carbon offsetting footprint comes because it almost looks like sometimes you just push on to the consumer and we dont even where that goes. Yeah. So ill, ill just repeat because i think it might have been quite so the question was about and whether theyre essentially doing a better job and a question about the Carbon Footprint footprint. Yeah, go ahead. Yes. So on the european question, the first thing ill say is, you know, im a scholar of american regulation and policy and so i dont want to go too too far into the into parts that are not my kind of deep area of expertise. But but i do think that one thing you see around the world is that deregulation or privatization happened in a lot of places. And this was a move that wasnt just in the United States. It was happening everywhere. And that really shifted things a lot of different places. And so i think as we think about policy. We want to both look at how things work now, but also how things worked before in a lot of these different and we might find that, you know, as i mentioned earlier, things work differently in different places and there may be other features. How much state capacity do you have to run a Public Service . How big are you . Are you singapore or not . Do you have a huge geography . That means you have to fly to lots of different places . Are you very small . You know, these factors may matter quite a bit and so i am to draw too many lessons from any given foreign experiences they may be quite different from the context the United States. On the question of climate, i think a really important question. If jet fuel is a major cost for airlines, its a major contributor to Carbon Emissions as well it to me, one of the interesting things about thinking about reforms is how we could imagine a system where we could actually get more service to more places, but simultaneously address of these concerns. And theres new technologies emerging now, sustainable fuels. The possibility electric planes that at the moment can fly shorter distances would put small numbers people but that might be workable to increase to smaller cities smaller towns in a way that massively increase the Carbon Footprint. I also think and suggest the in the book that we think about having kind of air Innovation Fund where some of the profits from the good go into supporting cutting edge r d in a wide variety of areas but but including on on addressing these climate issues it still does seem striking that airplane ads, while weve become more efficient, are still basically the same as the sixties you know, i see a question when way, way back to do regression in nature are you on to finance not i dont think so i flew flew earlier today so i called on the wrong guy and that is right for capitalism would you care about other topics . Are there other examples outside of airlines that fit this model of what are we thinking about deregulated . But they really shouldnt be . Yeah, its a great question. So the question was, are there other example models of this kind of other businesses that were sort of Like Airlines regulated maybe deregulated . And the answer is yes, there are a whole bunch of them in fact, you know, the tradition in america that i talk about in the book, they call it the american tradition of regulated capitalism, was that in these businesses were not like others, the ones that are more likely to be concentrated. We regulated them differently, and that included transportation. So railroad and maritime shipping airlines to busses also inner city busses in the energy sector, Electric City oil and gas pipelines, banking telecommute locations. And whats interesting is in all of these sectors had deregulation the last 40 years. And i think a lot of people would say these sectors have a fair number of problems, say the least in the context of covid. For example, we had issues with maritime shipping. We had real issues with railroads over the last few years. We had a financial crisis in 2008, we had a bank failure earlier this year. If you in texas or california, youre very familiar issues with the electricity grid. These are, you know, broadband internet, for example, you know, isnt in rural areas in a in large parts of this country. So there are lots of problems in all these sectors, too. And i think part of that story is a question of Public Policy choices. And we can solve some of those problems if think about making different choices as as policymakers it does. Me that there are you know, in some ways businesses that are essential to other businesses and tend, as you said, towards concentration or monopoly. Why dont we take one last question and im going to have got a faculty meeting about this gentleman in the front to see so much, to talk. I have two quick questions. So, one, my first questions that do you have a one question, if you dont mind . Okay. So the current problem with iran does true. Do you think it has something more than the iranian trade . So so the monopoly of the Airline Industry in this country is also due to the absence of a High Speed Railway network. And we dont have much option to go to l. A. , for instance, ill to a kind of support from airlines the Greyhound Bus which is not great. Well, so do you think to boost up the amtrak or to have a High Speed Railway that works can also help us to improve the airlines operation. So its a great question. So the one of the challenges in thinking about transportation policy is have an intermodal policy, which just means one that considers the different modes of transportation. And so we used to have really big Rail Networks and then there was more investment in highways and trucking. Those competed with rail, and we shifted to a more highway based system thinking about National Transportation strategy that these different modes, i think would be an important step forward for the country because we would have to ask questions like should we increase rail between certain sets of cities . Where would that make more . How do we think about the intersection between trucking, rail across the board . Just both passengers and for things like freight and transporting goods . And so i think thats a really important and also a policy direction that we need more attention to. Well, big questions, no time left. Lets try me once again, let me remind you, i think that i shall be signing books. If youre interested in a signed copy with books, outside book culture has kindly come from Morningside Heights to to to sell books here. So join me again. Thank you. Coming from the