Airline Deregulation Act Of 1978: A Case Study
Airline Deregulation Act of 1978 According to Congress, the Airline Deregulation Act of 1978 which was also known as ADA was to amend the Federal Aviation Act of 1958 to totally phase out the Civil Aeronautics Board (CAB) (Congress, n.d.). As such, the primary purpose of the act was to remove the federal government control over routes, fares, schedules and market entry of new airlines (GAO, 1996). The Airline Deregulation Act of 1978 was introduced by Senator Howard on February 6, 1978 and was signed into law by President Carter on October 24, 1978 (Congress, n.d.). Its purposes includes the maintenance of safety as the highest priority in air commerce; placing maximum reliance on competition in providing air transportation services; the
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On October 20, 1977, the act was signed into law by President Carter and as a result, the cargo carriers were free to set rates based on market conditions, free to fly any domestic route and allowed to use aircraft of any size (Lawrence, 2013).
The Failure of Railroad Regulation By the 1970s, the airline industry had been regulated for almost 40 years by the CAB while the railroad industry had been regulated for more than 80 years by the Interstate Commerce Commission (ICC) (Lawrence, 2013). Over 80 years of regulation by the ICC, the railroads industries were in major financial crisis and being feared that the airlines industries were going to have the same problems, hence rising the reason to deregulate the airlines industries (Lawrence, 2013).
The CAB Procedures and …show more content…
Airlines operating in bankruptcy has become a trend since deregulation, but did not undesirably affected non-bankrupt airlines (GAO, 2006). Between 1978 and 2005, the revenue passenger miles (RPMs) grew from 188 billion RPMs to 584 billion RPMs (GAO, 2006). Between 1978 and 2005, the number of available seats also increased from 306 billion available seat miles (ASMs) to 758 billion ASMs (GAO, 2006). The revenue passenger enplanements also increased from 254 million to 670 million (GAO, 2006). Although the U.S. airlines revenues grew almost four time since 1978, the expenses also increased proportionally (GAO,
On October 20, 1977, the act was signed into law by President Carter and as a result, the cargo carriers were free to set rates based on market conditions, free to fly any domestic route and allowed to use aircraft of any size (Lawrence, 2013).
The Failure of Railroad Regulation By the 1970s, the airline industry had been regulated for almost 40 years by the CAB while the railroad industry had been regulated for more than 80 years by the Interstate Commerce Commission (ICC) (Lawrence, 2013). Over 80 years of regulation by the ICC, the railroads industries were in major financial crisis and being feared that the airlines industries were going to have the same problems, hence rising the reason to deregulate the airlines industries (Lawrence, 2013).
The CAB Procedures and …show more content…
Airlines operating in bankruptcy has become a trend since deregulation, but did not undesirably affected non-bankrupt airlines (GAO, 2006). Between 1978 and 2005, the revenue passenger miles (RPMs) grew from 188 billion RPMs to 584 billion RPMs (GAO, 2006). Between 1978 and 2005, the number of available seats also increased from 306 billion available seat miles (ASMs) to 758 billion ASMs (GAO, 2006). The revenue passenger enplanements also increased from 254 million to 670 million (GAO, 2006). Although the U.S. airlines revenues grew almost four time since 1978, the expenses also increased proportionally (GAO,