Transportation Deregulation
Dean A DeFrank
Transportation Principles
Embry Riddle University
Module Two
Deregulation
All modes of travel have experienced great changes through the years. Those changes were the government getting out of the travel management business and allowing the free market to determine the course of these modes of travel. The following will describe in simplistic form the effects of deregulation on each mode of travel.
Airline Deregulation: The Airline Deregulation Act of 1978 removed government control over fares, routes and creation of new airlines. The Civil Aeronautics Board (the governing body on airlines during regulation) powers of regulation were removed thus allowing the industry to be exposed to market forces. The Act, however, did not remove or diminish the regulatory powers of the Federal Aviation Administration (FAA) over all aspects of air safety. Airline deregulation has enabled more competitive pricing and increased carrier flexibility. Prior to deregulation, airline pricing was regulated by the Civil Aeronautics Board. Additionally, air routes were also controlled tightly. With more freedom, carriers can offer more effective options to those who wish to use airfreight as a means of shipment.
Railway deregulation: Railroad Revitalization and Regulatory Reform Act of 1976 eased regulations on rates, line abandonment, and mergers. Four years later, Congress followed up with the Staggers Rail Act of 1980. The most important features of the Staggers Act was that it allowed greater pricing freedom, and simplified merger processes. Finally, it expedited the line abandonment process, allowing multi-modal ownership, and permitting confidential contracts with shippers. Deregulation allowed railroad companies to change their business model from passenger to freight. With the advent of air travel, railroads were losing money in the passenger industry and deregulation allowed them to shift toward freight instead. This increased profit because the
Transportation Principles
Embry Riddle University
Module Two
Deregulation
All modes of travel have experienced great changes through the years. Those changes were the government getting out of the travel management business and allowing the free market to determine the course of these modes of travel. The following will describe in simplistic form the effects of deregulation on each mode of travel.
Airline Deregulation: The Airline Deregulation Act of 1978 removed government control over fares, routes and creation of new airlines. The Civil Aeronautics Board (the governing body on airlines during regulation) powers of regulation were removed thus allowing the industry to be exposed to market forces. The Act, however, did not remove or diminish the regulatory powers of the Federal Aviation Administration (FAA) over all aspects of air safety. Airline deregulation has enabled more competitive pricing and increased carrier flexibility. Prior to deregulation, airline pricing was regulated by the Civil Aeronautics Board. Additionally, air routes were also controlled tightly. With more freedom, carriers can offer more effective options to those who wish to use airfreight as a means of shipment.
Railway deregulation: Railroad Revitalization and Regulatory Reform Act of 1976 eased regulations on rates, line abandonment, and mergers. Four years later, Congress followed up with the Staggers Rail Act of 1980. The most important features of the Staggers Act was that it allowed greater pricing freedom, and simplified merger processes. Finally, it expedited the line abandonment process, allowing multi-modal ownership, and permitting confidential contracts with shippers. Deregulation allowed railroad companies to change their business model from passenger to freight. With the advent of air travel, railroads were losing money in the passenger industry and deregulation allowed them to shift toward freight instead. This increased profit because the