Increasing US regulatory interference in the business of airlines is a retreat from the free market principles that are the basis of deregulation and could have unintended negative consequences, IATA DG Tony Tyler told a Washington audience Thursday.

In a keynote address at the FAA Aviation Forecast Conference, Tyler said ill-conceived regulatory measures were unfairly biased against the airline industry and forced business practices on them that are not applied to other industries. “Consumers accept unbundled pricing models for everything from mobiles phones to cars,” he said.

“Unfortunately, we are seeing a US retreat from the free market principles it had with deregulation and in its place we have micromanagement that’s regulating how airlines compete,” Tyler said.

Among examples he gave were rules that require US carriers to hold a reservation for 24 hours, include all taxes and fees in the upfront ticket fee, and sell tickets via global distribution systems.

“The more you tinker with industry, the greater the chance of unintended consequences,” Tyler said.

For example, US airline cancellations are on the rise because carriers opt to cancel a flight rather than risk a lengthy delay for which they face hefty government penalties.

The message that needs to get out, Tyler said, is that US airlines and the aviation industry are major contributors to job creation and the economy. He pointed out that aviation generates up to $1.3 trillion in US annual economic activity and 10.5 million jobs. “The best way to kill an industry is to over-regulate and over tax it,” Tyler said.

He said taxes now represent about 20% of the cost of a US airline ticket. “The Administration’s 2013 budget proposal heaps even more taxes on aviation, with much of the receipts used to balance the budget or reduce the deficit. That won’t stimulate air travel or economic activity,” he said.

“The lack of vision for US aviation and the lack of a coordinated aviation policy is frankly shocking,” the DG said.