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Paper half written as follows. No plaigarism. Need an advantage or disadvange two more pages in microsoft word double spaced.
In the years leading up to 1978 there were five major airlines that dominated the market as well as the skies. These major airlines were regulated under the Civil Aeronautics Board (CAB), by 1978 there was a demand for lower airfares. There were several factors and courses of actions for the US Government to consider. Two of these courses of action will be presented here as well as advantages and disadvantages of each. In conclusion, the purpose of the Airline Deregulation Act of 1978 is presented.
Keywords: CAB, aviation, revenue, deregulation
4.7- Case Analysis: Airline Deregulation Act of 1978
The airlines of the United States had long been regulated by the government, the same year the CAA was established so to was the Civil Aeronautics Board or CAB. Where the CAA was tasked with regulation of safety, standardization, testing and upgrades to the national airspace, the CAB was tasked with forming dedicated routes for specific airlines as well as setting the price to fly those routes. “By the 1970s high inflation, low national economic growth, escalating fuel costs, and rising labor costs hit the airline industry hard.” (Gale Encyclopedia, 2000)
The government had regulated the major airlines for years, fixed routes, fixed prices. There were several low-cost carriers in operation, but due to the route regulations many could not operate the same city to city destinations as the larger airlines did. The rising costs of almost everything in the 1970’s led to a public outcry that changes be made, the public wanted more choices and at a better price. The airline industry was jumpstarted by the government post World War I, the country was now many wars separated from that conflict, and as seen in the past changes were called for once again.
III. Significance of the Problem
The rising costs in the 1970’s drove down airline profits due to the number of people who couldn’t afford to fly. “Regulation by the federal government had enabled airlines to proper, but it also kept fares high and prevented airlines from operating as efficiently as possible.” (Air and Space) Efficiency was greatly needed in a time where the cost of all goods and services was on a sharp rise. If the airlines and government wanted to have full aircraft a change was needed.
IV. Development of Alternative Actions
Alternative Action 1. Allow the CAB to continue to regulate the airlines.
Advantages. The CAB has regulated the airlines and regulated them successfully for close to 40 years at this point, there have been rises in costs over the years and it all settles eventually. The airline industry has always rebounded, due to funds being pumped in by the government.
Disadvantages. The CAB has regulated the airlines for close to 40 years, yes, the advantage is also a disadvantage. As in past history with aviation in the United States it seems tides of change come along every few decades. If a change is not made passenger service will continue to drop due to the rise in inflation, this could cripple the airline industry and set the country back a number of years, similar to what was seen with US versus European aviation advances in the early years.
Alternative Action 2: Deregulate the airline industry.
Advantages. The deregulation of the airline industry would mean more choices for the public, they wouldn’t have to fly a set airline on a set route at a set price. They could choose to fly the competitor on the same route for possibly a lower price, or even a low-cost airline from a different airport to a different destination. This would increase profit revenues and allow for maximum usage of the aircraft and routes.
Disadvantages. Deregulation will be met with a lot of pushback from the major airlines as well as politicians where those major airlines serve. Both the major airlines and the politicians know that competition breeds lower prices, this takes the top dollar, which is the bottom line out of the airline’s pockets and the politician’s constituents. It won’t be an easy battle to overcome.
Alternative action 2 is the best choice, it creates more choices for the public and will create new revenue stream at a time when it is needed most. Instead of flying large jet airliners at fractional capacity there will be full aircraft again. Even with potentially lower ticket prices, the airlines will still make significantly more money than they are in the current state. It will create competition which will benefit the end user, the customer, in the long run. Airlines, like many other industries, are a service industry, with that comes the fact that people like choices.
Gale Group Inc. (2000) Gale Encyclopedia of U.S. Economic History. Retrieved from:
Smithsonian National Air and Space Museum. (No Year Listed) America By Air: Deregulation A Watershed Event. Retrieved from: