If you are flying during the holidays, do take a look at the color of your plane.
Is it rather bland?
The reason is deregulation. After 1978, when government stopped approving fares, guaranteeing profits, and allocating routes, the world of flying changed.
Before 1978…
If you wanted to fly from NYC to Washington, D.C., you could take the Eastern Airlines shuttle. The sole source of the service, Eastern guaranteed a seat to every customer. Arrive late and the plane is full? Eastern said, “Not to worry. We have an extra plane.” Similarly, Braniff Airways commissioned artist Alexander Calder for artwork on the outside of planes and had designer uniforms for its stewardesses. Neither Eastern (1991 bankruptcy) nor Braniff (1982 bankruptcy) survived deregulation.
After 1978…
Now, in a deregulated world, competition rather than government determines profits. Because painting planes is expensive, airlines avoid colors that need upkeep. Not only is the plane out of service for more than a week but also, you need a lot of paint–250 gallons for a jumbo jet and 60 for something smaller like a Boeing 737.
More from econlife on airline deregulation, here and here.
The Economic Lesson
Deregulation transformed flying. Pre-1978, airlines enjoyed the benefits of monopoly. Afterwards, when the market changed to oligopoly, airlines had to worry about costs, fares, and responding to competition. Here is an excellent video from Annenberg that includes a segment on the impact of airline deregulation.
I just heard in a podcast that being a good economist means lifting the veil off of the unseen. Have you ever thought about the impact of deregulation on the color of an airplane?
An economic question: How were consumers affected by airline deregulation?
