"Airlines, Regulators, and “Unusual Hospitality” "

Throughout the period of strict airline regulation (1938-1984), during which the Civil Aeronautics Board was in charge of air routes and rates, airlines, CAB officials, and members of Congress were in constant contact. Such communications ran the gamut from necessary to unseemly, as airlines sought to ingratiate themselves with the people who controlled them. Airlines invited politicians and bureaucrats to join (invitation-only) airline clubs; gave special attention to their luggage and made sure they weren’t bumped from overbooked flights; and flew them (and their wives) abroad on all-expenses-paid vacations to Honolulu, Bermuda, Hong Kong, Paris, and Johannesburg. Although the CAB’s ethical rules barred Board officials from accepting “unusual hospitality,” most benefits fell squarely into the realm of the “usual” and were met with little more than raised eyebrows from observers.
In the 1970s, however, criticism of these friendly relationships got noticeably louder, as consumer groups like Ralph Nader’s Aviation Consumer Action Project argued that close ties between airlines and airline regulators were contrary to the public interest that the CAB was supposed to be promoting. Most prominently, ACAP’s commitment to challenging—in the press, in the courts, and in Congress—favors accepted by CAB chairman Robert Timm in 1974 eventually led to Timm’s resignation, to an investigation into airlines’ illegal campaign contributions, and to congressional scrutiny by the Senate Subcommittee on Administrative Practice and Procedure. This paper, based on research in airline trade publications, CAB records, and the records of the Ford White House, brings together scholarship from business history, administrative legal history, and the development of the consumer movement, to examine why consumer critiques of the close relationship between regulators and regulated and demands for regulation in the public interest led instead to the deregulation of airlines and the end of the CAB.