The Airline Industry during the Regulated Era
The airline industry before 1977 was very different than the industry today. Before the Airline Deregulation Act of 1978, the airline industry was regulated by the United States Government under the Civil Aeronautics Board. Regulation provided many benefits to air carriers such as set route pricing, and a difficult to enter marketplace. The regulated era also had numerous drawbacks such as inefficiencies of route structuring and carriers being able to seek high profits through changes in the market. Airline regulation ended with the passing of the Airline Deregulation Act of 1978 and the industry has since operated in a deregulated free market.
The beginning of the regulated era stated with the Civil Aeronautics Act of 1938. The Civil Aeronautics Act established a system of airline regulation under the authority of the Civil Aeronautics Board. The Civil Aeronautics Act and the Civil Aeronautics Board were brought by congress to ensure that the airline industry properly served and addressed the needs of the industry and the public.
The Civil Aeronautics Board serves a large purpose in the regulation of the airline industry. The CAB had three main functions: to award routes to airlines, to limit the entry of air carriers into new markets, and to regulate fares for passengers. These regulations provided a reasonable stable industry. The goals of the CAB were to provide the American public with the safest, most efficient, least expensive, and widest ranging air service possible.
The Civil Aeronautics Board regulated numerous aspects of the commercial aviation sector of the airline industry. It heavily controlled airline entry into and exit from certain markets. This was one way competition in the industry was kept to a minimum. The CAB also set fares for passengers and cargo. This eliminated competition from an airline underpricing air fares and driving other airlines out...
References: T., Christopher. (2008) Thirty Years of Airline Deregulation: An Analysis of Changes in the Industry. www.voices.yahoo.com
Siddiqi, Asif. (n.d.) Deregulation and its Consequences. www.centennialofflight.gov
Wensveen, John G. (2011) Air Transportation
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