Airline Deregulation
In 1938, with the airline industry growing, the Civil Aeronautics Board was created to oversee the airline industry and it was treated as a public utility with the CAB setting prices and routes and many other aspects in regards to an airline’s operation. Often its lengthy bureaucratic procedures were a hindrance rather than a help and begin pushing for airline deregulation. For example, in 1967 World Airways applied for a new low fare route between New York and Los Angeles. The CAB studied the request for six years before declaring its records were stale and dismissed the request.

The large airlines looked at airline deregulation, but liked the system as it was as profits were virtually guaranteed, but legislators witnessed the very public railroad bailout in 1976 and feared the airlines may be headed in the same direction. In 1975 the government began to study the effects of airline deregulation and the airline deregulation act was passed, closing the CAB by 1975.

The benefits of airline deregulation has been seen more by the flying public than the airlines since the industry is now controlled by competition and not the government’s protective regulations. Between 1978 and 2001, nine major carriers and hundreds of smaller carriers either went out of business or into bankruptcy, including over a dozen that started up at the beginning of the deregulation.

Airline deregulation had little effect on passenger safety as flight safety regulations are set and regulated by the Federal Aviation Administration, while the Department of Transportation oversees the rest of the industry’s operations. However, as a result of airline deregulation many companies found themselves in stiff competitive climates resulting in labor disputes over job cuts and pay issues. Several large airline also worked into the hub system, flying smaller planes into a hub and then routing passengers onto other planes to their final destination. This worked in the airline’s favor until smaller, regional companies began entering a low fare market.

Passengers have reaped the best benefits of airline deregulation in the form of lower prices, easier routes to more destinations while airlines have an easier time adjusting routes, which planes to use on specific routes and in the speed at which air fares can be adjusted.