Short Summary of Degradation of Airline, Trucking and Railroad

DISCUSS THE IMPACT OF DEREGULATION ON

The Railroad Industry, The Airline Industry, and The Trucking Industry

Deregulation on the Airline Industry

The 1978 Airline Deregulation Act which removed the authority of the Civil Aeronautics Board from the industry. So it affects American airlines operation which includes routes, fare, and schedules. Deregulation leads to the market competition.

Deregulation lead to the benefit of price competition. Between 1978 to 1990, deregulated fares have been average 10 to 18 percent lower, travelers had been saved $5milion to $10milion a year. The most reason is the airline company is free to introduce jets and jumbo jets.

Since 1990, because of market competition rules, airline companies offer the discount fare to get more customer. According to the research, “91 percent of all passenger miles traveled were on discount tickets, at an average discount of 65 percent from the posted coach fare.” But this fare phenomenon is not fair for everyone.

Another benefit of deregulation is improved the efficiency of the airline. Deregulation removed airline prices and flight restrictions. The Productivity is in these following area:

First, airline through the big discount fares and redeem points to avoid large number unused seats, “succeeded in filling a greater percentage of those seats—from an average of 52.6 percent in the ten years before 1978 to 61.0 percent in the twelve years after.” Second, the liberalization of routes allows airlines to plan their operation according to their own demands. Third, the pressure of price competition was allowed carriers to put more seats on the plane, “the average went up from 136.9 in 1977 to 153.1 in 1988”.

Without government over control, many airline carriers dropped unprofitable routes, and new airlines sprung up which make the new market. And in order to reduce cost, airlines developed a "hub and spoke system" where some airports are used as a connecting point for passengers from...