[Author’s Name]
[Institution’s Name]
Essay on The Positive Effect Of Airline Deregulation
The Airline Deregulation Act of 1978 virtually replaced the economic regulation provisions of the Federal Aviation Act of 1958. It is surely the most comprehensive overhaul of a government regulatory scheme in history. The preamble states that the purpose of the Act is to foster an air transportation system that relies on minimally restricted competition to determine the quality, variety, and cost of air services.
In fact, the Act is intended to remove to the greatest possible extent governmental control of air carriers.
Deregulation does indeed seem to be the Promised Land. Prices raise more slowly, productivity an increase, service expands, and everyone is happy. However, after the initial euphoria, it turns out that profits are not really increasing after all.
When booking a flight, most consumers do some price shopping. Where competitive alternatives exist, there has been some measure of pricing competition under deregulation. Those who price shop usually opt for the lower fare (although, as noted earlier, frequent-flyer mileage programs and travel agent commissions militate against the lowest price).
Travelers who have been through the ordeal of a hub connection may ask for a nonstop if one is available, or, if not, a one-stop. Some may also shop for a convenient departure, although published schedules are today unreliable.
It has great effect in the economy of airlines. Of all the studies that have examined the economic effects of airline deregulation, the most widely quoted has been a Brookings Institution study published in 1986.
The authors, Steven Morrison and Clifford Winston, allege that as a result of airline deregulation, there has been "at least a $6 billion (in 1977 dollars) annual improvement in the welfare of travelers" (Morrison & Winston, 1989). This $6 billion (now $10 billion, adjusted for inflation) has been repeatedly cited by proponents of deregulation....
