Académique Documents
Professionnel Documents
Culture Documents
This article's use of external links may not follow Wikipedia's policies or
guidelines. Please improve this article by removing excessive or inappropriateexternal links, and
converting useful links where appropriate into footnote references.(May 2012)
Airline deregulation is the process of removing government-imposed entry and price restrictions on
airlines affecting, in particular, the carriers permitted to serve specific routes. In the United States,
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.
Contents
[hide]
1 Introduction
3 Post-deregulation
o
3.2 Price
4 Criticisms
5 Notes
6 References
7 External links
Introduction[edit]
As jets were integrated into the market in the late 1950s and early 1960s, the industry experienced
dramatic growth. By the mid-1960s, they were carrying roughly 100 million passengers and by the
mid-1970s, over 200 million Americans had traveled by air.[1] This steady increase in air travel began
placing serious strains on the ability of federal regulators to cope with the increasingly complex
nature of air travel.[citation needed]The onset of high inflation, low economic growth, falling productivity, rising
labor costs and higher fuel costs proved problematic to the airlines. [2]
Although most industry scholars agree that the purpose behind government regulation is to create a
stable industry,[3][4] in the decades leading up to deregulation many airline market analysts expressed
concerns with the structure of the United States' passenger air transport system. Concerns included
high barriers to entry for fledgling airlines, slow government response to existing airlines entering to
compete in city-pairings, and monopolistic practices by legacy airlines artificially inflating passenger
ticket prices.[citation needed]
In order to address these growing concerns airline deregulation began in the USA in 1978. It was,
and still is, a part of a sweeping experiment to ultimately reduce ticket prices and entry controls
holding sway over new airline hopefuls. Airline deregulation had begun with initiatives by
economist Alfred E. Kahn in the Nixon administration, carried through the Ford administration and
finally, at the behest of Ted Kennedy, signed into law by President Jimmy Carter.[citation needed]
Globally, state supported airlines are still relatively common, maintaining control over ticket prices
and route entry, but many countries have since deregulated their own domestic airline markets. A
similar but less laissez-faire approach has been taken by the European Union, Australia, England,
Scandinavia, Ireland and select South and Central American nations. [5]
travel within the US, went back even farther, to the policies of W. F. Brown, [citation needed] the US
postmaster general in the 1920s and early 1930s in the administration of President H. Hoover.[citation
needed]
Brown had changed the mail payments system to encourage the manufacture of passenger
aircraft instead of mail carrying aircraft. His influence was crucial in awarding contracts so as to
create four major domestic airlines: United, American, Eastern, and Transcontinental and Western
Air (TWA).[citation needed] Similarly, Brown had also helped give Pan American a monopoly on international
routes. (See also the US Centennial of Flight Commission [7])
Typical regulatory thinking from the 1940s onward is evident in a Civil Aeronautics Board report. In
the absence of particular circumstances presenting an affirmative reason for a new carrier, there
appears to be no inherent desirability of increasing the present number of carriers merely for the
purpose of numerically enlarging the industry.[8]
Post-deregulation[edit]
In the wake of deregulation, airlines have adopted new strategies and consumers are experiencing a
new market. Below are the marquee effects of deregulation.
Price[edit]
Ultimately deregulation has certainly provided some financial benefits to the average air traveler.
Prices have declined steadily since deregulation. [10] Quoting the Heritage Foundation, a Conservative
think-tank promoting free-market ideology,[11] "The inflation adjusted 1982 constant dollar yield for
airlines has fallen from 12.3 cents in 1978 to 7.9 cents in 1997. This means that airline ticket prices
are almost 40% lower today than they were in 1978 when the airlines were deregulated." [12] Along
with rising US. populations[13] and the increasing demand of work-force-mobility, these trends were
some of the catalysts for dramatic expansion in passenger miles flown, increasing from 250 million
passenger miles in 1978 to 750 million passenger miles in 2005. [14]
Economists from the Brookings Institution,[15] a political think tank with both liberal and conservative
members,[16] and George Mason University[17] have also proven and further agree, that indeed
consumers save thanks to the lower fares resulting from a competitive airline marketplace created
by deregulation.[18]
Service quality[edit]
The quality of airline service can be measured in many different ways, including the number of
aircraft departures, the total number of miles flown, seating comfort, aesthetic appearance of cabin
crew, the timeliness of service, other programs and services, and various frills or amenities. [citation needed]
Over the past several years the public's view of airline service quality has shown a significant drop.
[19]
According to the 2008 American Customer Satisfaction Index, a University of Michigan study of
80,000 consumers expectations and preferences, the major US airlines ranked last among all the
industries surveyed. In 2009, the airlines have moved up to being one point ahead of Cable &
Satellite TV and the newspaper industry (though results for all industries were not available at the
time of this writing).[20]
In 2011 Congress finally responded to repeated calls for the United States government to pass an
"Air Passenger Bill of Rights" to provide specific requirements about what must happen to air
passengers in certain conditions.[21] The push for the bill stemmed from several high profile
passenger strandings over the last several years. On April 25, 2011, the Enhancing Airline
Passenger Protections rule, 76 Fed. Reg. 32,110, was enacted.[22] Amongst other items, the rule
includes raising the minimum "denied boarding compensation" to customers with valid tickets yet still
not allowed to board the aircraft. The legislation further penalizes airlines up to $27,500 a passenger
if left stranded aboard an aircraft, on a tarmac for more than three hours. [23] In 2010, the largest trade
associations representing airline management interests before Capitol Hill, Airlines for America and
the Regional Airline Association, opposed this legislation stating that they could self-regulate
themselves and they already had begun implementing systems by which to mitigate any tarmac
delays.[24][25] Later American Eagle, an RAA airline member, was the first airline to be fined under the
new legislation. A total settlement including fines and compensation paid to passengers totaled
$800,000 for tarmac delays incurred in Chicago in May 2011. [23]
Deregulation advocate Alfred Kahn noted a deterioration in the quality of airline service following
deregulation, including the "turmoil" of massive restructuring of airline routes, price wars, conflicts
with airline employee unions, airline bankruptcies, and industry consolidation. [26] He also noted
unexpected congestion and delays "that have plagued air travelers in recent years". [26] However, he
also argued that such congestion and delays was also a sign of deregulation success (because it
indicated a large increase in passenger volume due to decreases in the price of airfares). [26] Kahn
considered the turmoil, congestion, and delays to be unforeseen "surprises" from deregulation and
continued to support deregulation in spite of these events.[26]
merger with American Airlines), and Midwest Express was purchased by Republic
Airlines and subsequently closed.
Open Skies[edit]
Main article: Open skies
Beyond the domestic liberalization of the airlines in the USA, Open Skies agreements are
bilateral agreements between the US and other countries to open the aviation market to foreign
access and remove barriers to competition. They give airlines the right to operate air services
from any point in the US to any point in the other country, as well as to and from third countries.
[citation needed]
The first major Open Skies agreements were entered into in 1979.
The U.S. has Open Skies agreements with more than 60 countries, including fifteen of the 27
EU nations. Open Skies agreements have been successful at removing many of the government
implemented barriers to competition and allowing airlines to have foreign partners, [citation
needed]
access to international routes to and from their home countries and freedom from many
traditional forms of economic regulation.[citation needed] A global industry would work better with a
globally minded set of rules that would allow airlines from one country to establish airlines in
another country and to operate domestic services in the territory of another country.[citation
needed]
These agreements still fail to approximate the freedoms that most industries have when
competing in other global markets.[9]
Criticisms[edit]
With long standing companies like Braniff, TWA, and Pan Am disappearing through bankruptcy
since 1978, the years since 2000 have seen every remaining legacy carrier file for bankruptcy at
least once. US Airways has filed twice in the same number of years. During the same time
period, Southwest Airlines continued to expand its route structure, buy new airplanes, and hire
more employees, while remaining profitable,[33] JetBlue, a new airline that started up in 1999,
"was one of only a few U.S. airlines that made a profit during the sharp downturn in airline travel
following the September 11, 2001 attacks.... For many years, analysts had predicted that
JetBlue's growth rate would become unsustainable. Despite this, the airline continued to add
planes and routes to the fleet at a brisk pace.... JetBlue is one of the largest airlines in the
Northeast United States."
Unions contend that airline management now uses bankruptcy as a tool to liquidate labor
contracts. Progressives view this as union-busting, allowing management to throw out contracts
already agreed upon while still receiving exorbitant bonuses themselves, regardless of work
quality.[34] In doing so, according to the labor union view, airline executive management has
created what many are calling the great race to the bottom[35] with one company filing for
bankruptcy after the next, leaving only those who have not filed for bankruptcy, paying their
employees what was contractually agreed upon.[36]
One of the key elements deregulation sought to end were airline oligopolies and monopolies.
However since 2010 the number of major airlines has receded dramatically. With Delta merging
with NorthWest, American merging with US Airways, Continental merging with United,
SouthWest with AirTran and Frontier being purchased by Republic who also owns Chautauqua
and Midwest Express and bought Shuttle America in 2005, [37] it's leaving many market analysts
wondering if we haven't come full-circle. Instead of using their political connections to keep
competition out, now, larger airlines simply price-war new entrants out of business, or simply buy
them.[38] This leaves the weaker airlines to merge, eliminating market choices and bringing us
closer to an oligopoly market.
Various solutions have been proposed by labor unions, former management and industry
analysts, including, for the first time since 1978, federal control over some of the prices charged
and routes served by major airlines[39] with a view of increasing price and cost competition. [14][14][39]
In a June 2008 former CEO of American Airlines, Robert Crandall stated,
The consequences of deregulation have been very adverse. Our airlines, once world
leaders, are now laggards in every category, including fleet age, service quality and
international reputation. Fewer and fewer flights are on time. Airport congestion has
become a staple of late-night comedy shows. An even higher percentage of bags are
lost or misplaced. Last-minute seats are harder and harder to find. Passenger
complaints have skyrocketed. Airline service, by any standard, has become
unacceptable.[40]
emerging economies