Airline re-regulation won't fly - for now. But some new rules on safety are proposed

About a month ago, Royce Yudkoff was taking an Eastern Airlines flight from Boston to Tampa, Fla. As he boarded, he noticed that the first 12 to 15 rows were cordoned off so no one could sit in them. As it turned out, the front emergency exit was not working, and Eastern had come to an agreement with the Federal Aviation Administration (FAA) that if it didn't use the front rows, it could still fly the plane. Mr. Yudkoff said the experience ``horrified'' him. His job as a management consultant requires him to fly the not-so-friendly skies three times a week. ``What really concerns me is if airlines allow slipshod maintenance on things you can see, what is the state of things you can't see?''

Yudkoff is one of many passengers who think airline deregulation has gotten out of hand. It's gone beyond inconvenience: ``There are going to be safety problems,'' he says, and that could cause the government to start re-regulating the airline industry.

Some new safety regulations were proposed Saturday by Transportation Secretary Elizabeth Dole. They would limit airspace around busy airports and require anticollision devices on more aircraft.

``Economic re-regulation is not in the cards,'' says Steven Hilton, an aide to Sen. John Danforth (R) of Missouri, who has taken a lead in aviation legislation.

But safety re-regulation? That's another matter, says economist Alfred Kahn, who as head of the Civil Aeronautics Board (CAB) in 1978 masterminded deregulation. If re-regulation means ``the government doing the things it should always have been doing all through these years,'' he says, ``then clearly there is a need.'' Increased staffing and better technology to cope with the volume of air traffic and passengers are two of these things.

``But that's not re-regulation,'' Dr. Kahn says. That's the government fulfilling its responsibilities.''

For months, soaring consumer complaints and a spate of near-collisions by some of the nation's most esteemed airlines have built pressure on Congress to act. The fatal Northwest Airlines crash last week in Detroit may be a catalyst for such action.

Legislators ``don't want to legislate on the basis of one accident,'' says an aide to the Senate Subcommittee on Aviation. ``But that's what they'll be hearing about when they're home'' on recess. He thinks pressure at home will prompt Congress to pass some new laws regulating airline service and safety when it reconvenes this fall.

But these laws will probably be limited to getting the airlines to report delays and having federal regulators monitor air safety.

Secretary Dole said her proposals were not a result of the Detroit crash. In one of those proposals, the FAA would create nine new terminal control areas, or TCAs, to increase the number of airports protected by restricted airspace. TCAs are now in effect at some two dozen major airports.

Also, Mrs. Dole directed the FAA to review the possibility of requiring all aircraft seating more than 10 people to install collision avoidance equipment.

The question of whether the airline industry needs more, or less, regulation is a topic of serious debate. Proponents of deregulation say the regulatory system would be better off in private hands, which would be quicker to put in new technologies to make airways safer, and would be more responsive to customer complaints. Others say the government has a legitimate surveillance role in the airways, and that more, not less, vigilance is needed.

The rebirth of an industry

A brand new industry was born in 1978, when the government ceded some powers to the marketplace. Until then, the CAB determined who could start an airline, what routes airlines could serve, and what fares they could charge. The industry then tried to chart a course through its newfound freedom. Prices dropped as competition intensified: In the last nine years, 198 new airlines tried their wings. Only 37 survived, and recently, prices have begun to creep up in some markets as fledgling carriers closed shop or were bought by larger airlines.

This has led some critics to charge that today's passengers have the worst of both worlds: rising prices, fewer choices (than when the number of competitors was at its peak in 1984), and deteriorating service. But Kahn says such an interpretation ``ignores the benefits'' that still exist.

``Deregulation did precisely what we wanted it to do,'' Dr. Kahn says. ``People who couldn't fly before are flocking to these low fares, with all the inconvenience, the advance reservations, the penalties, the crowding, the narrow seating. That's giving people what they want.''

The skies carried 418 million people last year, about 50 percent more than in 1978, and economists believe that at least a fourth of that increase is the result of deregulation. Clifford Winston, a senior fellow at the Brookings Institution, figures that fares are 29 percent below what they would have been if a competitive marketplace had never been installed. That saves consumers about $11 billion a year in fares alone, he says.

And now, the bad news

Enter Royce Yudkoff and millions of other travel-weary passengers. Yudkoff used to regard the inconveniences with mild humor. Five or six years ago, he began evolving into a new kind of traveler, ``the truculent traveler,'' and noticed others adapting in a similar fashion. As a truculent traveler, Yudkoff would surprise flight attendants by standing up for his rights - demanding, for example, to hang his carry-on suit bag in the front coat area, instead of letting the cabin crew fill the compartment with their luggage so they could make a quick exit.

Yudkoff would often win; he would always feel better for trying.

But now, he says, ``it's been beaten out of me. There's nothing funny about traveling by air anymore.''

Thousands echo Yudkoff's sentiments, many in formal complaints. More than 15,600 people lodged complaints in the first half of this year, versus about 6,400 in the first half of 1986.

``From 1976 to 1986, we didn't hear much complaining,'' observes Dr. Winston at Brookings. Then in one year, the problems seemed to grow at an exponential rate. ``Deregulation couldn't have simply gone bad in one year,'' he says. What has happened is that air travel finally hit a critical point: ``Deregulation pushed traffic volume to the limit of what the current system can handle.''

Airlines, of course, are the obvious scapegoat. People fume when airlines pay a fraction of the cost of a damaged suitcase, or take months to pay a hotel bill after a delayed flight makes a passenger miss a nighttime connection. They chafe when the airline waits until a plane has pulled away from the gate (when passengers can't switch to another airline) to announce that the flight will be delayed an hour.

But ``it's hard to blame the carriers for not sticking to a system when the technology [in the system] hasn't kept up,'' says Winston.

Take the No. 2 complaint from travelers: lost, delayed, or damaged luggage. When deregulation let carriers choose their own routes, they found it economically efficient to move to the hub-and-spoke system, rather than the more linear routes the government had mapped out. That meant a lot more connecting flights, and transferring baggage from one plane to another. But airports don't have the baggage handling systems to accommodate the new pattern - ergo, lost or delayed luggage.

How to iron out the wrinkles

The No. 1 complaint, delayed or canceled flights, grew out of a structurally inefficient market, free-marketers say. The number of delayed flights at 42 major airports increased 72 percent between 1983 and '86. (The FAA says the number has declined a little in recent months.)

Airlines do schedule an impossibly high number of flights to leave a given airport at, say, 8 a.m. But, says Kahn, the pricing system is making them do it. Airports base the fee they charge airlines for landing rights according to the weight of the plane. The same size plane would pay the same fee at peak traffic times as at slow periods, so airlines want the planes as full as possible. The way to do that is to schedule as many flights during the peaks as possible.

The system, Kahn says, creates an incentive for delays and congestion. The answer, he and others contend, is to let the marketplace work.

``If you charge several thousand dollars to planes that land [at busy airports at peak hours], which would translate into $50 or $75 per ticket, those people to whom it's important to travel at those hours would be able to do so with reasonable assurance'' that they would arrive in time, he says. Other travelers less able to pay would opt for off-peak hours, thus spreading out the flight times and reducing congestion.

Others say many problems will be worked out with time. The frenzied pace of mergers - 50 since December 1985 - has created havoc as companies with different procedures and equipment try to join up. Eventually that will calm down, analysts say.

But Congress is not so sure the marketplace will iron out the wrinkles without some legislative starch. Both houses are considering bills that would require carriers to disclose their delay record. The Department of Transportation is considering a rule that would require airlines to meet specified on-time performance standards for their flights, something House members are urging. In a more hands-on attempt to reduce delays and safety problems, Rep. Bud Shuster (R) of Pennsylvania has proposed requiring the FAA to step in and reduce the number of flights if operators schedule too many flights during, say, a half-hour period.

Putting inconvenience into perspective

Such legislative measures go at what is ultimately a side issue, safety experts say. True, the number of fatalities has dropped, and with the exception of the Northwest crash, it has been two years since a major domestic carrier had a fatal accident. But other statistics draw a picture of an industry ``tottering on the edge'' of danger, as one Senate aide puts it.

In the first half of 1987, the number of reported near-misses jumped 37 percent over the first half of '86. During the same period, the number of ``pilot errors,'' like the ones Delta pilots were reportedly making earlier this summer, jumped 50 percent. Many people worry that a shortage of pilots, combined with a greater demand for them since deregulation, is forcing airlines to put less experienced pilots in the cockpit.

But legislating safety is more difficult than legislating convenience. ``There are no real solutions, short term,'' says Ernest Arvai, an aviation expert at Arthur D. Little Inc., in Cambridge, Mass.

Both the administration and Congress are aiming to increase the number of air-traffic controllers to 16,000, nearly as many as the FAA had in 1981 before President Reagan fired 11,000 controllers. That move, however, will do little to improve safety in the near future. ``We need them today, and it takes four years to grow a good one,'' Mr. Arvai says.

Allan McArtor, who became chief of the FAA last month, recently outlined his ``Campaign '88'' to modernize the air traffic system. One part is to train air traffic controllers on simulators akin to the ones pilots train on, to get them up to speed more quickly.

There is support for increasing the number of inspectors watching over maintenance, though nothing is concrete yet. ``The FAA is overwhelmed,'' says Arvai. ``They have to rely on airlines to police themselves.''

Fare wars have forced airlines to cut costs, and many suspect that a result has been shortcomings in maintenance. But Arvai, who consults for several airlines, thinks they have only cut corners on surface maintenance, ``on the order of not replacing the bulb in the overhead reading light rather than not checking the engines.''

Since a spate of fatal accidents in 1985, the FAA has stepped up its inspections and slapped record fines on carriers for maintenance problems. Mr. McArtor has vowed to keep up the pressure.

Perhaps the thorniest problem is getting technology into cockpit, control tower, and airport sufficient to handle the web of traffic. Some of it is approaching. Congress, for example, is considering a bill to require commercial jets to have more sophisticated radar technology that would not only alert them that a small plane is nearby, but also outline evasive action. That requirement is likely to be in force in a couple of years.

Other projects, like modernizing airports, expanding their capacity, and putting new equipment in control towers will take perhaps a decade.

There are also complaints that the Aviation Trust Fund - which has accumulated some $6 billion in surplus funds and is a linchpin in the FAA's modernization plans - is being tied up by Congress and the administration. (Not spending the money makes the deficit look smaller.) It's up in the air whether Congress will vote to take the fund out of the budget process this year, but the FAA's McArtor has said he will push to get the money released.