About a year ago, more or less, it began to seem like the transatlantic airline market was on the threshold of a new era. And with cautious optimism, we said so in this space.

That optimism stemmed from an unusual confluence of three events in the fall of 2005. First, aviation negotiators for the U.S. and the European Union laid out the framework for a comprehensive airline service agreement that would give the airlines of each side expanded rights to cross the pond and to enter local markets on the other side.

Second, the Dept. of Transportation, hoping to seal that deal and move beyond the "framework" stage, sought to create a more favorable atmosphere for foreign investment in U.S. airlines by bending the rule on what it meant to "control" a U.S. carrier. It was an awkward and inelegant proposal, but it at least marked an attempt to move the U.S. off the dime.

Third, Virgin America, against this historic backdrop, formally filed its application at the DOT for U.S. airline rights, giving the U.S. the opportunity to signal to the world that it was ready to embrace change and free trade, even if it didn't see eye-to-eye with the home government of Richard Branson, progenitor of the Virgin brand.

Since then, the U.S.-E.U. "agreement" has languished, the DOT proposal to tweak the definition of control has crawled away and died and the application of Virgin America is in legal limbo, buried in a DOT docket under reams of red tape and carping legal memos from labor unions and competing airlines, pointing out every "i" that hasn't been dotted, every "t" that hasn't been crossed.

In short, a year has passed and the U.S. is not much closer to bringing its aviation policies into the 21st century than it was when this century began. And the immediate prognosis for change isn't good.

If we were to make a list of the biggest disappointments of 2006, this unfinished business would be on it.

Legacy regulators

Speaking of disappointments, we're a little underwhelmed with some of the recommendations that have come down from the DOT's inspector general regarding airline service.

As reported in our news pages today, the IG, as he is known inside the Beltway, wants the DOT to consider imposing a variety of new requirements on airlines to bring about improved customer service.

It was the goal of the Airline Deregulation Act, way back in 1978, to place "maximum reliance" on competitive market forces, rather than government regulations, to shape the U.S. airline industry. That's the mandate for routes, and it's the mandate for fares. It ought to be the mandate for customer service, too.

We're 100% behind the idea of regulating safety and hammering airline companies (indeed, any companies) that are guilty of fraud or discrimination.

But after nearly 30 years of deregulation, we suspect there are still too many people in Washington who place too much faith in the federal government's ability to devise and enforce industry-specific rules that tell airlines how to communicate with or treat their customers.

In the early days of deregulation, the airlines had to relearn pricing and route planning the hard way because they didn't have those skills when the government told them where to fly and how much to charge.

There could be a lesson there for customer service.

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