U.S. Airlines and Carmakers Need to Go Global

Policies that insulate them from competition created the conditions that led to bailouts and bankruptcies

By Clifford Winston of the Brookings Institution. Excerpts:

"While we rightly celebrate the 1978 Airline Deregulation Act, airports and foreign competitors that could serve U.S. routes weren’t deregulated. Public airport monopolies and duopolies allow airlines to raise fares. With foreign carriers prohibited from flying domestic U.S. routes, domestic fares have been kept artificially high even while load factors approached 85% just before the Iran war. As a result, when a domestic shock hits, the system lacks the diversified global networks and capital depth needed to absorb the blow.

The car industry suffers from a similar condition. While the automakers aren’t currently liquidating, they are operating on a margin-over-volume strategy that has pushed the average transaction price of a new car to a record $50,000. This wasn’t a natural market evolution. It was manufactured by decades of trade barriers.

From the 1964 “Chicken Tax” to the 100% tariffs on Chinese electric vehicles in 2025, Washington has walled off the American consumer. These barriers have allowed domestic makers to abandon the low-cost econobox segment entirely, focusing instead on $80,000 SUVs. Because they are shielded from the $15,000-a-car global competitors that are modernizing fleets in Europe and Asia, automakers have become addicted to a narrow, affluent demographic."