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Middle cities, 'isolated' by deregulation, push for return of airline flights

By Thomas WattersonBusiness and financial writer of The Christian Science Monitor / November 14, 1980



Cambridge, Mass.

Chattanooga, Tenn., considered itself a casualty of airline deregulation. Until recently, Chattanooga, like some other smaller cities, had lost what its businessmen regard as an essential service: direct flights to several important cities. One of the most important, they felt, was New York. They didn't like the idea of having to fly to the Big Apple via Atlanta. But city officials didn't allow their businessmen to remain grounded for long.

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"I told them [Chattanooga officials] they would have to work as hard to get back that air service as they had worked to bring in industry," said Marvin Cohen, chairman of the Civil Aeronautics Board (CAB). "That was a year ago. Six or eight months later, Republic Airlines was providing the New York service."

Mr. Cohen was in Cambridge recently to participate in an air transport conference at the Massachusetts Institute of Technology. He was interviewed between sessions of that conference.

Chattanooga's experience, Mr. Cohen believes, is similar to what many other medium-sized cities will have to do if they are to overcome one of the negative effects of airline deregulation: the tendency of major airlines to reduce or discontinue service to smaller cities in favor of large, metropolitan areas.

One who agrees with Mr Cohen is Charles Van Rysselberge, an official of the Chattanooga Chamber of Commerce, which helped coordinate efforts by local officials and businessmen that led to Republic's entry into their airport.

"First, we got the city and county to finance an airline consultant," Mr. Van Rysselberge explained. The consultant was able to give the city the information it needed on current air travel, potential growth of the area, and expected future airline travel. City and business leaders used this information to present their case to the airlines.

"We just decided we had to take a more aggressive approach with the airlines. . . . We have to look at them just like they were an industrial prospect," Mr. Van Rysselberge said. "I think this is the way other cities are going to have to deal with this problem." It is also the way Chattanooga is going to try winning direct air service to other cities, including Charleston, Washington, and Phildelphia, he added.

For the CAB's Mr. Cohen, the episode points up what he sees as one of the few disadvantages of airline deregulation: the reduction of service to medium-sized communities. And even this problem, he argues, has not been as severe as some have portrayed it.

"No city has lost all its air service," he noted. "But some do have less than they had." Some cities have seen a shift from frequent service by a major airline to more "commuter" service by smaller carriers feeding passengers to big-city airports.

Overall, he believes, deregulation has been working well, with airline mergers providing better connections, with easier rules permitting airlines to expand service, and with more competition in fares and scheduling. All of these , he says, will eventually work to the advantage of the air traveler.

Critics of deregulation have noted that while some air fares dropped after it went into effects, others -- especially for flights between medium-sized cities -- have gone up rapidly.

While he acknowledges this is true, Mr. Cohen points out that the industry's costs went up some 54 percent between 1976 and the end of 1979. These costs include fuel, crew, maintenance, depreciation, rentals, and insurance. Of these , fuel and crew costs rose most rapidly. Despite these increases, however, the average cost of an airline ticket rose only 23 percent in that period, Mr. Cohen noted.

Mr. Cohen will probably be the last CAB chairman. As part of deregulation, his agency is scheduled to pass out of existence over the next four years. Any regulatory functions still needed after that, he said, will be taken over by the Federal Trade Commission and the Departments of Justice and Transportation. The Federal Aviation Administration will continue to monitor air safety, as it does today.

International aviation must continue to be regulated, Mr. Cohen said, because of variations between regulations of different nations. In the US, this will be handled by the Transportation Department. But domestically, "We believe the marketplace is the best regulator."