Early growth air transportation prior to deregulation of the US airlines industry
The development of air transportation in the USA after the start of World War 1 as the war of European powers and their friends spurred establishment of airplane technology and aviation among the combatant powers. In 1915, the USA first developed the National Advisory Committee for Aeronautics (NACA) body which was responsible for undertaking, promoting and institutionalizing aeronautical research to help in airplane design. NACA was the first to create the first sound barrier aircraft. The government controlled the establishment of aviation in the country. In 1918, the US postal services started providing faster means of mail delivery by use of airplanes to transport mails between cities. At first, USPS used the USA army aviation is carrying the mails, but the army was not willing to be involved in sending letters because they were engaged in World War 1. This forced the USPS to implement their air service for mail delivery which later developed becoming one of the biggest air networks in the world. The Air Mail Act permitted postmaster to be using independent private organizations for the transportation of mails and formed charging rates for the airmail postage.
Seven reasons why airline regulation was removed in the US market
Deregulation started because planes were not occupied and remained half full in most trips and the airlines did not provide a discounted fares as it was prohibited by the civil aeronautics board (CAB). The airlines incurred loses as their planes were half full in most of the trips and the public thought the fares were high and they could not afford hence the regulation was not benefiting anyone. Deregulation occurred because airlines were unable to add new routes as their routes were controlled by the CAB. When implementing a new course, airlines were forced to seek permission from the board, and the process for the approval took a lot of time and sometimes the airlines were forced to find a court order for the authorization to be made. Deregulation occurred because airlines were not allowed to remove old routes as they were to get approval from the CAB which in most cases prohibited the airlines from discontinuing their old ways. Deregulation was done because airlines were not profitable with the CAB contributing to the losses incurred by the organization. The regulation was removed because new airlines could not be implemented as the CAB prohibited new entrants in the industry. Management stopped because the industry was experiencing as death cycle because the airlines were not profitable and their goals and objectives could not be achieved. Deregulation was influenced by the lessons learnt from Southwest and PSA airlines which were not regulated by CAB and were highly profitable.
Delegate your assignment to our experts and they will do the rest.
The effects of airline deregulation in the US
Deregulation resulted into dropping of airfares as inflation made adjustments on dollars making airfares drop than before the deregulation. For example, a study done on passengers’ savings since deregulation indicated that fares have dropped and passengers can save $ 6 billion for fares in a year. Deregulation led to an increase in air travel as a lowering of airfares encouraged many people to be using air travel hence the justification for more flights across the country. In the past air travel was considered for the wealthy and elite but with the change in regulation, it has been democratized and is available for all people. Deregulation resulted in frequent flier programs which were implemented in 1979. This program became essential for air travel experience and marked the beginning of the deregulation era. Many Americans have joined the frequent flier programs, and many people are acquiring free tickets from these services.
Significant benefits and drawbacks of the US airline industry deregulation
Deregulation has resulted in the creation of new job opportunities making many jobless individuals employed reducing unemployment rates. After the deregulation, the airlines created new routes, added new flights and were responding many of the American flying services and this created many job opportunities for many people. Many people acquired indirect jobs in this industry such as taxi drivers, airport employees and airport builders, security screeners and hotel employees. Deregulation has brought the benefit of having vastly and safer airlines. Although many supporters of regulation urged that airlines cannot ensure the safety of their own and competitive and commercial deregulation pressures would increase airline expenditures, the airlines have proved to ensure safety and are guided from the economic effects by their marketplaces. Deregulation has assured airlines are implementing the establishment of better planes. The collapsing of the worldwide airplane building organization led to two main firms remaining and this reduced competition which enhanced change and innovation in the aerospace companies.
Remaining regulatory constraints on the US airlines today
Deregulation did not remove all the controls and regulations of airlines. For example, the rule of the establishment of new airlines still exists today. Although new airlines are allowed to operate freely in the USA, they have to undergo an approval process to be allowed to run as a scheduled airline service by the transportation department. New airlines have to show competencies in various fields and have to pass some tests from their management and ownership which has limits on foreign ownership and effective international control. There are existing regulations on flying and maintaining a plane. When choosing a new flight, airlines have to choose planes which have been certified by FAA as being appropriate and safe. Airlines are supposed to hire qualified pilots and should have two pilots for each airplane. FAA regulations demand that airlines should hire flight attendants whose number should be proportional to the number of passengers on the plane. FAA has rules and policies for marinating planes and maintaining the correct amount of passengers. Railway Labor Act regulates how airlines hire and fire their staffs, and the regulations protect the employees.
