Government intervention in the economic sector of industries can prove to be effective at creating a reliable service.
There is also precedence for the souring of an industry if the heavy regulation continues for too long, such as the railroad system.
Leading up to the deregulation of the airlines, there were many arguments being thrown out into the ether pushing for the proper legislation. This movement led to the eventual passing of the Act in 1978.
According to Act, the purpose of it was “to encourage, develop, and attain an air transportation system which relies on competitive market forces to determine the quality, variety, and price of air services” (“Text of S. 2493 (95th): Airline Deregulation Act (Passed Congress Version)”).
With this goal in mind, the deregulation of the airline industry has achieved what it sought to do.
The Results of the Airline Deregulation Act
Right after the deregulation occurred, there was a period of turmoil.
For the first time, the industry now had the ability to choose fares, routes, and different business models to accommodate.
With a watchful eye on the competition, airlines were quick to try to beat everyone else out.
This highlighted the inefficiencies of legacy practices and encouraged companies to become more fiscally responsible.
The new threat of competition pushed the prices of fares down.
According to Lawrence, by 2010 fares declined more than 40% since 1978 (2015). These more affordable prices have also encouraged more passengers to fly which saw an increase of nearly 500 million passengers annually by 2010 (Lawrence, 2015).
Variety in locations and airlines jumped due to a new hub and spoke approach which allowed passengers to have the chance to get to an unseen number of destinations.
According to Lawrence the number of airlines nearly doubled since deregulation (2015). The record speaks for itself and the industry overall has shown that it has improved since 1978.
The goal of the deregulation of the airlines was to allow competition to regulate the industry rather than the government.
It has proven to be quite effective and, in the process, has made traveling by air more accessible for the average citizen.
There are many other byproducts of the Act that include increased safety, higher levels of employment, and innovation in general that accelerated aviation to where it is today.
The U.S. is a leading economic power, and the aviation industry is only boosting it by increasing interstate and intrastate commerce.
In the 40 years since it first was passed, deregulation has proven to be quite successful at obtaining its original goals and continues to push the airline industry to higher heights every day.
If you want to read more aviation history, check out this article here on the Civil Aeronautics Board!
Sources:
“Text of S. 2493 (95th): Airline Deregulation Act (Passed Congress Version).” GovTrack.Us, www.govtrack.us/congress/bills/95/s2493/text. Accessed 26 Jan. 2021.
Lawrence, Harry. Aviation and the Role of Government. 3rd ed., Kendall Hunt Publishing, 2015.
