Airline Deregulation

Good Essays
On October 24, 1978, President Carter signed into law the Airline Deregulation Act. The purpose of the law was to effectively get the federal government out of the airline business. By allowing the airlines to compete for their customers' travel dollars, was the thinking, that fares would drop and an increased number of routes would spring up.

Expected Results

The results of airline deregulation speak for themselves. Since the government got out of the airline business, not only has there been a drop in prices and an increase in routes, there has also been a remarkable increase in airline service and safety. Airline deregulation should be seen as the crowning jewel of a federal de-regulatory emphasis. Prices are down: Airline ticket prices have fallen 40% since 1978. Flights are up: The number of annual departures is up from 5 million in 1978 to 8.2 million in 1997. Flights are safer: Before deregulation, there was one fatal accident per 830,000 flights, now the rate is one per 1.4 million flights. So what's the problem?

Misplaced Priorities

It appears that the Clinton administration and some in Congress will cut off their nose to spite their face. By almost all measurable ways, airline deregulation has been a success. But in response to a few small start-up airlines complaining to the Department of Transportation about "predatory pricing," Washington legislators and regulators are poised to act. "Predatory Pricing" is code for: "fares are too cheap for some airlines to compete in that market 'cause they will lose money". In response, the Department of Transportation recently proposed guidelines to limit the maximum number of seats an airline can offer on particular routes and which forbid them from dropping prices below certain levels, all in the name of "fair" competition. In other words, " we can't have prices get too cheap because then the Value-Jets of the world won't be able to jump into the market place." Of course then you would be paying

You May Also Find These Documents Helpful

  • Powerful Essays

    Airline Deregulation

    • 1597 Words
    • 7 Pages

    Airline Deregulation act of 1978 Aston A Samms Embry Riddle Aeronautical University Abstract The United States Airline Deregulation Act of 1978 was a dramatic turning point in America. It was the first systematic dismantling of a comprehensive system of government control since the Supreme Court declared the National Recovery Act unconstitutional in 1935. It was also part of a broader movement that, with varying degrees of thoroughness, transformed such industries as trucking, railroads, buses…

    • 1597 Words
    • 7 Pages
    Powerful Essays
  • Satisfactory Essays

    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…

    • 371 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    ECO2 Airline Deregulation: A Comparative Report Submitted by: Jan Abigail Maravilla Harold De Guzman Mario Giordano Sarmiento Lady Valles Marlon Antojado Submitted to: Mr. Paul Caampued III ABSTRACT This study provides a comparative analysis of the state of the airline industry before and after deregulation. The paper considers most if not all possible areas of growth and development that will affect the airline transportation industry. It generates…

    • 1702 Words
    • 7 Pages
    Powerful Essays
  • Good Essays

    Airline deregulation is the process of removing restrictions on airlines affecting, in particular, which carriers are permitted to serve particular routes. As with other forms of deregulation, the terminology is sometimes criticised, since new forms of regulation are commonly developed to deal with problems such as the allocation of the limited number of slots available at airports. Airline services were historically heavily regulated, in part because of concerns about monopoly and oligopoly arising…

    • 365 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Deregulation

    • 857 Words
    • 4 Pages

    Fifteen years have passed since the enactment of Republic Act 8479, otherwise known as “Downstream Oil Industry Deregulation Act of 1998”, but down to this day, Oil Deregulation Law remains to be a subject of disputes. The heightening tension is not only based on whether or not we should regulate or deregulate oil industry but is also founded on an important economic question: Should the government intervene in setting oil prices or should they leave the market outcome to market players – producers…

    • 857 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    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…

    • 576 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    3. Which governmental entities develop transportation policy? What powers and limitations exist for these agencies? According to the text, the three branch of government all have a part in establishing policy as it relate to transportation. All branches of government possess some limitation and regards to what control they have with the overall workings of this massive “engine that make the United States work”. With the executive branch (The President and the others that he appoint.) influences…

    • 1482 Words
    • 6 Pages
    Powerful Essays
  • Powerful Essays

    Financial Deregulation

    • 847 Words
    • 4 Pages

    Financial deregulation Financial deregulation created an environment in which mortgage lending expanded and speculation in other financial markets were heightened. The result was, first, the failure of mortgage firms, banks and a major insurance company, followed by the collapse of the market for short term loans. This initially led to a liquidity crisis and then to insolvencies and a debt deflation and the whole economy sunk into a deep recession. Financial deregulation prepared the conditions…

    • 847 Words
    • 4 Pages
    Powerful Essays
  • Powerful Essays

    Introduction Thesis: Deregulation has more negative effects on global economy than positive. Deregulation, this word is heard on the news, economists use this word quite often, and government officials are somewhat terrified of this word. What does deregulation mean? Deregulation is the process in which a government may remove or reduce certain restrictions in matters of business to have a more efficient operation of markets. By observing the effects that deregulation can cause on an economy, can…

    • 1656 Words
    • 7 Pages
    Powerful Essays
  • Powerful Essays

    An Assessment Whether the Downstream Oil Industry Deregulation Act of 1998 Violates the 1987 Constitution A Thesis Proposal In Partial Fulfillment Of the Course Requirements in DOCULMG 2013 TABLE of CONTENTS INTRODUCTION Background of the Study .………………………………………………………………………... 3 Statement of the Problem ………………………………………………………………………... 6 Objectives of the Study …………………………………………………………………….......... 8 Significance of…

    • 8799 Words
    • 36 Pages
    Powerful Essays