Airline Deregulation Act

The Airline Deregulation Act (ADA ) is a law of the United States, which was adopted on 28 October 1978 ( signed into law). Previously, it was signed by then-President Jimmy Carter. Purpose was the deregulation of commercial air travel, which was left to the laws of the market.

Prehistory

Since 1938, the rules for domestic air transport by the Civil Aviation Office Federal Civil Aeronautics Board (CAB ) have been established. This particular price, routes and flight schedules. In addition, it promoted the cross-subsidization of more expensive long-haul flights to cheaper short-haul flights. The CAB had ultimately to ensure that all airlines were able to generate a reasonable return.

However, the CAB had a reputation as a bureaucratic monster. Airlines had to take long processing times into account when they applied for a new route or a ticket price change, which was then often not granted at the end. World Airways wanted to introduce a low cost route from New York City to Los Angeles in 1967. The CAB considered the application for full six years old - and rejected it in the end because he was " out of date " ( " stale" ) was. Continental Airlines was after eight years finally introduce a route from Denver to San Diego, but only after a U.S. appeals court ruled the approval by the CAB.

This rigid system came in the 1970s under pressure. The 1973 oil crisis and economic stagnation changed the economic environment, as well as technological progress, including the Jumbo Jet. Most airlines that indeed benefited from the quasi- guaranteed income, but wanted to stay with the old system. In contrast, however, the passengers and communities who had to pay the expensive prices. The U.S. Congress was concerned that liberalization of air transportation market could show similar long-term ruinous consequences as was the case with the American railways, which partially collapsed in 1976.

Follow

A report by the Government Accountability Office in 1996 concluded that the average fare per passenger mile in 1994 was lower by 9 percent as of 1979. Fares declined 1976-1990 adjusted for inflation by about 30 percent. The load was increased, partly because now more appropriate aircraft were used: on more frequented routes bigger, smaller on other routes models.

Nevertheless, not all routes benefited equally from this deregulation. On busy routes, prices fell proportionately more than on secondary roads.

However, this market opening led to great financial losses of individual companies and conflicts with unions. Between 1978 and mid-2001, therefore, nine major airlines ( including Eastern, Midway, Braniff, Pan Am, TWA and U.S. Airways ) and 100 smaller companies went bankrupt or had to be liquidated. This also affected almost the entire dozen new companies, which had been founded only after the deregulation. From mergers and acquisitions among surviving firms was a club of the " Big Six " ( Big Six ) of mega - airlines that oligopolistic conditions in many markets created.

Cons for border regions have not materialized to the extent, as had been predicted before the law. The hubs of major airlines favors and fobbed off the outlying airports with smaller machines as a feeder - but were - before the low cost airlines emerged.

The general service American airlines has decreased. The advent of low cost airlines showed that rather a greater need for reasonable prices as more comfort was available.

The increase in flight safety, which has since occurred, should be probably mainly due to the general technological progress and less on the implementation of this Act.

The Airline Deregulation Act is considered the birth of Revenue Management.