Airline Deregulation

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Airline Deregulation
Matt Paine
Brian Tappan
Sin Man Wong
Nick Ferdinand
Nate Riebel
Kyle Carnes
Airlines Before Deregulation
Civil Aeronautics Board (CAB), enacted in 1938
was an independent agency responsible for
regulation in the air transport industry.
Authority over airline routes, certification,
agreements, and certain other matters.
Main reason for CAB was to protect existing
carriers from competition and allow an infant
industry to grow.
Routes
The routes before Deregulation had to be
approved by the Government.
One Airline couldn’t Monopolize one route.
Agreements
Any agreements among carriers effecting air
transportation had to be filed and approved by
the CAB.
The act directed board to approve agreements
that were not adverse to the public interest, and
to reject all those that were adverse.
Certification
A board issued certificate is required before any
carrier may provide air service in the USA.
Scope & Purpose
To amend the Federal Aviation Act of 1958, 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, and
other purposes
Effect of Deregulation
Routes: Airlines have the right to fly wherever
they want
Example: Braniff Airlines
Rates: Carriers have the right to raise fares
– Price Wars
Promotions: After deregulation, carriers were
permitted to market their airline.
Benefits
The two most important consequences of deregulation
have been lower fares and higher productivity
Fares: Fares declined 30 percent in real, inflation
adjusted terms between 1976 and 1990
Productivity: The introduction of the Hub-and-Spoke
system has allowed increase efficiency by routing larger
planes on busier routes and smaller planes on less
traveled routes
Conclusion
Airline deregulation has worked
Its provided the air transportation industry with a
more flexible system
It makes the airline industry more competitive
internally
Increase efficiency and productivity for the
industry
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