[Author’s Name]
[Institution’s Name]
Essay on Airline Industry
Introduction
In 1938 the economic aspects of airline service were placed under control by the federal government in a manner resembling the historic control of surface carriers by the Interstate Commerce Commission (ICC) and of public utilities such as electric power companies by state public utility commissions.
The agency established to govern the economic regulation of airlines was the Civil Aeronautics Board (CAB). It consisted of five members, appointed for six-year terms by the president with the consent of the Senate, assisted by a staff that averaged about 750 employees.
Then, on October 24, 1978, the Airline Deregulation Act of 1978 (ADA) became law and with it was launched a new era in the history of our airlines. Despite its name, this act did not eliminate all economic regulation.
Rather, it reduced the extent of this regulation by steps over a period of several years through the end of 1984, at which time the CAB was abolished. Pursuant to the Civil Aeronautics Board Sunset Act (P.L. 98-443), enacted October 4, 1984-referred to hereinafter as the Sunset Act-all the CAB's remaining functions were transferred to the Department of Transportation (DOT).
For airline carriers, deregulation created both opportunities and dangers because it forced them to operate without a financial safety net, which had set a lower limit for fares, provided by the government.
During the 1980s entrepreneurs launched dozens of new airlines-most of which failed-and existing carriers intensified competition by expanding into markets they had not served previously. Numerous mergers occurred in the second half of the decade as carriers attempted to gain a greater share of the market and expand quickly.
Many airlines changed ownership or went bankrupt during the first decade of deregulation. Among the airlines that failed were some of the oldest names....
