Airline Deregulation Act of 1978

Abstract

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 Bilimoriarl and Banavarare Sridhar (2000) of the National Aeronautics and Space Administration (NASA) which have been incorporated to show the conflicting views regarding the benefits versus the drawbacks and fallout due to the publication. This paper will shed light on the difference of opinion which are still disputed today.

The Airline Deregulation Act of 1978 (ADA) caused several changes to the airline industry. Prior to the Deregulation Act, the Civil Aeronautics Board (CAB) controlled all air routes flown by airline aircraft. Each airline would have to lobby the CAB which in turn would award a contract. The airlines were secure in the fact that they were guaranteed funding which eliminated the fear of bankruptcy, albeit the government was spending an exorbitant amount of money flying routes with only a hand full of passengers onboard the aircraft on some of the shorter routes. In a 1965 Yale Law Journal article written by Michael Lavine, he concluded that CAB policies “fostered unnecessarily high fares, encouraged uneconomical practices, and limited the variety of services available to the public.”

Amending the Federal Aviation Act of 1958, which created the ADA, allowed the airlines to be more competitive. Additionally, it promoted a sense of...