Airline Deregulation Act Of 1978 Essay

1266 words - 6 pages

This paper explores the effect of the Airline Deregulation Act (ADA) on the airline industry as a whole and how it affected airlines individually. Airports and aircraft will also be examined along with benefits that were, and still are, passed along to the consumer. The paper also discusses the Civil Aeronautics Board (CAB), its role in the act and how the Federal Aviation Administration (FAA) came into play. How the act was actually an amendment to the Federal Aviation Act of 1958 and not a standalone document as many believed. Additionally, some excerpts from Michael Levine (1965), Supreme Court Justice Stephen Breyer (2011), and an article penned by Karl ...view middle of the document...

Additionally, it promoted a sense of pride and ownership to the carriers. Many industry innovations followed as a culmination of the changes. Perhaps the biggest benefit to travelers was through marketing innovations. Consumers were offered various incentives.
• Discounted fares were the most immediate and appealing advantage. Fares have dropped more than 35% since the inception the ADA. In 1999 the Brookings Institute estimated that the public was saving over $20 billion a year as a result of deregulation.
• Lower fares attributed to 55% savings and 45% from increased service frequency, through additional flights travelers reduced the number of days spent on the road.
• Frequent flyer programs, which reward repeat customers with free tickets and other benefits is continue to entice customers.
Technological innovations gave way to numerous advancements in aviation.
• Aircraft development was a necessity. Due to the increase in air travel, larger aircraft were required to handle additional passengers.
• With so many aircraft now filling the skies, concerns for the environment grew accordingly which led to the development of cleaner burning engines.
The logistics of handling so many passengers gave way to further developments.
• The Computer Reservation System (CRS). (Harrell Associates, 2002) The CRS linked travel agents directly to the various airlines via a global networking system. These systems helped airlines and travel agents to keep track of ever changing prices throughout the system.
• Code sharing agreements are another creation to expedite passenger movement. Any airline can use the 2 digit code from another airline to connect travelers with their destination meaning the first leg of a trip may be on one airline and the second may be on another.
The hub-and-spoke networks became abundant after deregulation whereas airports (hubs) were strategically place throughout the United States and were used as transfer points for passengers and cargo.
In addition to innovation, the ADA also spurred economic growth throughout the industry such as in the advent of jobs due to expanding operational requirements; aircrew, mechanics, operations personnel, ticketing agents, etc.
Although the ADA ushered in many benefits to travelers and forced innovations in the industry, it also brought suffering due to growing pains.
• Adverse effects to consumers included delays in arrivals and departures, safety issues, and an overall decline in quality and service.
• Increased congestion at facilities and airways.
• Job loss through merging airlines.
• Labor-management issues.
Opinions vary regarding the ADA and the benefits and fallout are still unfolding to date. These conflicting platforms are...

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