Air Transportation Deregulation

by: Kimberly Wylie

Table of Contents

Abstract  1

Introduction  2

Deregulation 2

Civil Aeronautics Board  3

Struggling Through Deregulation  4

Conclusion  5

References 6

Abstract

One of the most significant events in the air transportation industry was the Airline Deregulation Act of 1978. This paper will review what deregulation, in general is, and then move specifically to the Airline Deregulation Act of 1978. From there, this paper will explore what effects the Act has had on the industry. By understanding these concepts, one can better understand the environment the industry now operates in, and how far it has come.

Air Transportation Deregulation

Introduction:

One of the most significant events in the air transportation industry was the Airline Deregulation Act of 1978. This paper will review what deregulation, in general is, and then move specifically to the Airline Deregulation Act of 1978. From there, this paper will explore what effects the Act has had on the industry. By understanding these concepts, one can better understand the environment the industry now operates in, and how far it has come.

Deregulation:

Deregulation is, in its most simplistic terms, when the government removes certain regulations on businesses, to encourage the industry. The premise behind deregulation is that with fewer regulations impeding operations, businesses will become more competitive. This increased competition will then result in higher productivity levels, increased efficiencies, and lower prices for consumers (“Deregulation”, 2004). There have been some failures in attempts to deregulate certain industries. Most notably, the deregulation of the Savings and Loan industry in the 1980s was perceived as a failure and was subjected to re-regulation in order to balance out the industry. The Savings and Loan scenario is a perfect example of why regulation or deregulation must be handled responsibly and intelligently, taking into account and utilizing sophisticated economic theories to help predict the future results (“Deregulation”, 2004). The Airline Deregulation Act was signed into law on October 28, 1978. The Act was created to remove governmental control and open up the passenger air transport industry to free market forces. As noted above, the desire was to increased efficiencies within the industry by promoting competition, which would hopefully lead to reduced airfares for consumers (“Airline Deregulation”, 2004).

Civil Aeronautics Board:

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