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Essay on The 1978 Airline Deregulation Act
Introduction
The Airline Deregulation Act (ADA) was signed by the US legislation on October 28, 1978. The main reason to deregulate the airline industry was to take the commercial aviation sector out of the government control and expose the passenger airline industry to market forces. The stated purpose of deregulation act was "Amend the Federal Aviation Act to encourage, develop, and attain an airline transportation system which relies on competitive market forces to determine quality, variety, and prices of airline services." (Pub. L. No. 95-504) The unstated purpose was to maintain U.S. airline dominance. Deregulation of the U.S. industry allowed the creation of the frequent flier programs. Carefully supported by tax breaks, these programs transferred the free rides to the individual flier, regardless of the original financier of the trip. And therein lies the main problem: With the very best customers getting free rides, the airline industry has been ambushed by major losses in total revenue. (Pub. L. No. 95-504)
Advantages of Deregulation
Many researches have proven that airline deregulation has proved to be advantages for the passengers as well as the economy. According to a report published by U.S. Department of Transportation in 1990, "That the average fare per passenger mile was about 9 percent lower in 1994 than in 1979. Between 1976 and 1990 the paid fare had declined approximately 30 percent in inflation-adjusted terms." (U.S. Department of Transportation, 1990) Passenger loads have risen, partly because airlines can now transfer larger aircraft to busier routes and replace them with smaller ones on shorter, low-traffic routes. Between 1976 and 1990 average yields per passenger mile-the average of the fares that passengers actually paid-declined 30 percent in real, inflation-adjusted terms. Average yields were declining in the decades before deregulation as well, thanks largely to the introduction of jets and jumbo jets....
