The Impact of Unintended Consequences on Government Travel

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» Posted by on May 3, 2013 in Airlines | 0 comments

The “law of unintended consequences” (also called the “law of unforeseen consequences“) states that any purposeful action will produce some unintended results.  Deregulation was intended to increase competition and reduce costs.  Government travel policy experts had probably been hopeful that reduced costs and increased flights and airlines would make government travel easier and less expensive.  However, there were significant and unanticipated effects on government travel as a result of deregulation.

In 1978, when the Airline Deregulation Act was enacted, the airline industry was delighted to be free of the controls (particularly rates which directly impacted their profits and ability to expand) enforced by the Civil Aeronautics Board .  Surely the airlines, all the way down to the airline travel agents and associated industries, would benefit from increased competition and the ability to expand.  And, of course, the American public was assured, this would benefit the individual traveler because with increased competition would come lower prices and more choices.

What actually happened, was that as competition increased and expansion went well beyond what was economically sustainable; many airlines consolidated or went bankrupt.  In their attempts to increase profits, airlines added more routes and flights to increase their market share and we are all suffering the consequences of that decision: flight delays and poor customer service.  Government travelers are increasingly trying to avoid the connecting flights many contract carriers require because flight delays and cancellations make it increasingly likely that connections will be missed.   Since poor customer service is now the norm more often than not, a lower price has become more important than a specific airline unless, of course, the traveler can obtain a seating upgrade with his/her frequent flier miles.

A definite unforeseen benefit of deregulation is that it did provide a strong  market impetus for the technological development of the GDS by increasing the travel industries’ demand for additional controls and data on reservations, travel volumes, etc.. The other side of this coin, is that the GDSs are not standardized across their various platforms.  That is provides an incentive for companies to bypass them in order to avoid the fees and gain easier access to their own data for planning and negotiation purposes.   This also makes it very difficult to gather any semblance of consolidated GDS data that  the Federal government is trying to gather for negotiation leverage with the MIS TRX contract.

In hindsight, regulation of the airlines had actually provided both the airlines and the consumer with some important protections by evening out the playing field for everyone.  The limits on competition protected some of the weaker airlines, and also provided pricing protection to the stronger ones so they could make a regular profit and afford to staff planes and desks to provide a relatively high level of customer service.  Regulation also prevented much of the over-expansion of flights at high traffic gates/airports which kept the arrival and departure times from being stressed by unrealistic scheduling.

The law of unintended consequences has certainly shaped Federal travel policy, regulations and procedures in ways we could not have foreseen when first deregulation   appeared.  Deregulation did not turn out to be an unmixed  blessing for either the traveler or the airline industry.  While competition has spurred technological development and reduced costs, it has also led to an increased demand by government travelers for non-contract flights despite the restrictions on their use.  The economic incentive provided by deregulation for GDSs to independently evolve and proliferate, has ironically made it unexpectedly difficult for the Government to gather useful information from them to negotiate city-pair agreements or forecast needs.  These results were not anticipated when deregulation first occurred.

by Julie Speers

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