The Impact of Deregulation on the Airline Industry, the Railroad Industry and the Trucking Industry

The Impact of Deregulation on the Airline Industry

The aviation industry in the United States was facing several problems such as falling productivity, high inflation, rising labor costs, higher fuel costs and low economic growth. These problems led to the deregulation of the airline industry in 1978 with the Airline Deregulation Act that removed the various controls that influenced the decision power of the companies. The deregulation lasted about three years and the main objective was to increase competition between airline carriers and lower service prices. The deregulation began with the easing of tariffs and liberalization of routes. During the regulations, customers paid high rates and hadn’t many options because there weren’t many airlines companies. After the deregulation, increased competition, new companies have emerged due to lowering barriers entry of new airlines industries and the price decreased. In this competitive environment, the company has increased its investments in quality and marketing as well as the efficient use of its fleet in order to attract more consumers. Also, the cost control has become a major factor in the management of airlines. However, the rapid growth of the airline industry has triggered some problems like congestion at some airports, travel delays and low runway capacity especially during peak hours of travel. These problems are caused due to increased demand and the lack of investment in some airports. The opening of foreign markets by the government was another benefit resulted of the deregulation. This change encouraged the airlines companies to expand their markets internationally. The growth of the airline industry also has created new jobs. Nowadays, the airlines can operate air services from any point in the US to any point of the world. The competition motivated companies applying technological innovations in order to increase efficiency and quality. These technological innovations allow planes fly faster, farther...