Deregulation of the airline industry
a)Explain and contrast a regulated industry vs a deregulated industry:
A regulated industry maintained safety standards across the board. With this system the government was able to ensure better pay for employees It enabled the government to over charge on consistent routes to cover for less economic but still necessary routes. Also a monopoly allowed for a higher percentage of seats to be filled and cargo to be filled, at lower cost. (maximum potential) However, the unionized pay for the employes was far to expensive to allow for owners to generate much capital without charging consumers more. Therefore less consumers could afford, or wanted to pay for expensive travel. this lead the decline of airline traffic.
b) When was the airline industry deregulated?
First in America, in 1976 and then in Canada, in 1988.
c) Why was it deregulated? USA a survey was done to ascertain wether or not regulation was a beneficial as it was supposed to be. The results determined that the assumptions about regulation were proven to be less economically beneficial than was originally supposed. Although it was supposed, that averaging the prices of regular routes to cover less economically viable routes would enable airlines to run these lines to smaller rural towns in need, airlines usually abandoned them or sold them to smaller private lines. Despite the monopoly, the large crafts were equally sustainable as a smaller crafts due to less people relying on the industry. The monopoly system didnt get enough value per passenger mile as they originally supposed it did. Studies showed that unregulated flights were able offer far lower costs. The unions, also permitted by regulation, raised wages, which was then transferred on the consumer. The the system monopolies was not economically viable, which resulted in deregulation.
Canada, took a little longer to change. People began to speak out about deregulation in states and the research behind the change. The liberal
A regulated industry maintained safety standards across the board. With this system the government was able to ensure better pay for employees It enabled the government to over charge on consistent routes to cover for less economic but still necessary routes. Also a monopoly allowed for a higher percentage of seats to be filled and cargo to be filled, at lower cost. (maximum potential) However, the unionized pay for the employes was far to expensive to allow for owners to generate much capital without charging consumers more. Therefore less consumers could afford, or wanted to pay for expensive travel. this lead the decline of airline traffic.
b) When was the airline industry deregulated?
First in America, in 1976 and then in Canada, in 1988.
c) Why was it deregulated? USA a survey was done to ascertain wether or not regulation was a beneficial as it was supposed to be. The results determined that the assumptions about regulation were proven to be less economically beneficial than was originally supposed. Although it was supposed, that averaging the prices of regular routes to cover less economically viable routes would enable airlines to run these lines to smaller rural towns in need, airlines usually abandoned them or sold them to smaller private lines. Despite the monopoly, the large crafts were equally sustainable as a smaller crafts due to less people relying on the industry. The monopoly system didnt get enough value per passenger mile as they originally supposed it did. Studies showed that unregulated flights were able offer far lower costs. The unions, also permitted by regulation, raised wages, which was then transferred on the consumer. The the system monopolies was not economically viable, which resulted in deregulation.
Canada, took a little longer to change. People began to speak out about deregulation in states and the research behind the change. The liberal