Question

Discuss airline deregulation from its beginnings to now. How has it affected US airlines? What else can be done to deregulate the industry? Cite examples.

Answer 1

Airline deregulation the process of removing government-imposed entry and price restrictions on airlines affecting, in particular, the carriers permitted to serve specific routes.

The United States, the term usually applies to the Airline Deregulation Act of 1978.

A new form of regulation has been developed to some extent to deal with problems such as the allocation of the limited number of slots available at airports.

The airlines deregulation

As jets were integrated to the market at late 1950s and early 1960s, the industry experienced dramatic growth. By the mid-1960s, they were carrying roughly 100 million passengers and by the mid-1970s, over 200 million Americans had traveled by air.
The steady increase in air travel began placing serious strains on the ability of federal regulators to cope with the increasingly complex nature of air travel.The onset of high inflation, low economic growth, falling productivity, rising labor costs and higher fuel costs proved problematic to the airlines.

Although it is generally recognized that the purpose behind government regulation is to create a stable industry, in the decades leading up to deregulation many airline market analysts expressed concerns with the structure of the United States' passenger air transport system. Concerns included high barriers to entry for fledgling airlines, slow government response to existing airlines entering to compete in city-pairings, and monopolistic practices by legacy airlines artificially inflating passenger ticket prices.

In order to address these growing concerns airline deregulation began in the US in 1978. It was, and still is, a part of a sweeping experiment to ultimately reduce ticket prices and entry controls holding sway over new airline hopefuls. Airline deregulation had begun with initiatives by economist Alfred E. Kahn in the Nixon administration, carried through the Ford administration and finally, at the behest of Ted Kennedy, signed into law by President Jimmy Carter.

Globally, state supported airlines are still relatively common, maintaining control over ticket prices and route entry, but many countries have since deregulated their own domestic airline markets. A similar but less laissez-faire approach has been taken by the European Union, Australia, United Kingdom, Scandinavia, Ireland and select South and Central American nations.

The Airline Deregulation Act of 1978 removed many of the previously mentioned controls. Prior to deregulation, it was required that airlines first seek regulatory approval to serve any given route.

The beginning of federal government regulation of the interstate airline industry can be traced to the Air Mail Act of 1925 and the Air Commerce Act of 1926. Additional federal regulation of commercial aviation was imposed with the passage of the Civil Aeronautics Act of 1938.

In the wake of deregulation, airlines have adopted new strategies and consumers are experiencing a new market. Below are the marquee effects of deregulation.

The example in the deregulation is that telecommunications and trukking industries.

The purpose of Economic deregulation occurs when the government removes or reduces the restrictions in a particular industry to improve business operations and increase competition. The government removes certain regulations when businesses complain about how the regulation impedes their ability to compete the market in the quality segment and the service offering in the industry.