Airline deregulation

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

Airline services were historically heavily regulated, in part because of concerns about monopoly and oligopoly arising from the fact that, historically, in most cases, only a small number of airlines provided direct flights between a given "city pair".

Airline deregulation began in the US in 1978. It was a part of a sweeping reduction in price and entry controls in United States transportation begun with initiatives in the Nixon Administration, carried out through the Ford and Carter Administrations, and followed up on in the 1980s.

Economists who have estimated the costs and benefits of airline deregulation have cited major gains in economy for consumers and productivity in the industry. Morrison and Winston estimated in excess of $15 billions per year after about ten years after the Act was passed.

Many other countries have since deregulated their domestic markets, and a similar process has applied to airline markets within the European Union. However, many international airline markets remain subject to tight regulation.

Airline Deregulation in the United States

Prior to 1978, the Civil Aeronautics Board (CAB) controlled many aspects of domestic aviation in the United States. In particular, airlines required permission to serve any given route and incumbents could raise many obstacles to the granting of permission. The system was dismantled as a result of the Airline Deregulation Act.

A new problem has arisen in that when civil suite are filed against an airline in either state court of Federal court, the airline will seek to dismiss the matter under the ADA and this is often granted. The courts will however handle personal injury and breach of contract claims.

The DOT has taken the position that it has neither the authority nor the facilities to try or mediate most disputes between consumers and the airline, leaving many consumers to fend for themselves in a legal "No man's land" with their claims.

Airline Deregulation in Australia

Prior to 1990, Australia operated a ‘Two Airlines policy’ which effectively guaranteed the maintenance of exactly two airlines, one public (TAA, later Australian Airlines and then Qantas) and one private (Ansett), with almost identical fares, fleets and schedules. Discounting was only permitted to the extent that it did not necessitate an increase in standard economy fares. With the repeal of the two airlines agreement under the Airline Agreement Termination Act, which went into effect on 30 October 1990, this restriction was abandoned, along with limits on entry to the industry.

A number of unsuccessful attempts to enter the Australian market were made. The first successful new entry was Virgin Blue which was launched in 2000. The subsequent fare war and the decline in air travel following the September 11 attacks led to the collapse of Ansett, the rise of Jetstar and the restoration of a oligopoly market.

References

Stephen Morrison and Clifford Winston, The Economic Effects of Airline Deregulation (Studies in the Regulation of Economic Activity); Brookings, 1987

Alfred E. Kahn, article in the ConciseEncyclopedia of Economics


Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Airline Deregulation Act — [ thumb|President Jimmy Carter signs the Airline Deregulation Act.] The Airline Deregulation Act (or ADA) is a United States federal law signed into law on October 24, 1978. The main purpose of the act was to remove government control from… …   Wikipedia

  • Airline Deregulation Act — Unterschrift von Jimmy Carter unter den Airline Deregulation Act Der Airline Deregulation Act (ADA) ist ein Gesetz der USA, das am 28. Oktober 1978 verabschiedet wurde (signed into law). Zuvor wurde es vom damaligen Präsidenten Jimmy Carter… …   Deutsch Wikipedia

  • Deregulation — Part of a series on Capitalism Concepts …   Wikipedia

  • Airline Reservations System — The Airline Reservations System (ARS) was one of the earliest changes to improve efficiency. ARS eventually evolved into the Computer Reservations System (CRS), and then into Global Distribution System (GDS).The history of airline reservations… …   Wikipedia

  • Airline — For other uses, see Airline (disambiguation). Airline A Boeing 767 300ER of Delta Air Lines, one of the world s largest passenger airlines …   Wikipedia

  • Airline hub — An airline hub is an airport that an airline uses as a transfer point to get passengers to their intended destination. It is part of a hub and spoke model, where travelers moving between airports not served by direct flights change planes en… …   Wikipedia

  • deregulation — noun The process of removing constraints, especially government imposed economic regulation. The airline industry has not been profitable since Ronald Reagan began deregulation …   Wiktionary

  • Deregulation — The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Traditional areas that have been deregulated are the telephone and airline industries. In the late 1990s… …   Investment dictionary

  • Regional airline — Regional Airlines redirects here. For the Moroccan airline, see Regional Air Lines. For the French airline, see Regional Airlines (France). Flight West was a regional airline operating in Australia in the 1990s Regional airlines are airlines that …   Wikipedia

  • Surface Freight Forwarder Deregulation Act of 1986 — The Surface Freight Forwarder Deregulation Act of 1986, Public Law 99 521, is a federal law of the United States which eliminated federal regulation of prices, services and entry as to general commodities surface freight forwarders This Act was a …   Wikipedia


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.