Deregulation of Commercial Airline Industry

The deregulation of the commercial airline industry in the United States was initiated by the Carter Administration in 1978 (Thayer, 1983, pp. 359-363). In the United States, government is only a regulator of commercial airline activity. In most other countries of the world, however, government is also a shareholder (often the only shareholder) in airline companies (Pryke, 1987, p. 24). When deregulation of the airline industry is considered in most other countries, considerations of public ownership and privatization are also often involved (Doganis, 1985, p. 49).

In the international airline industry, Canada began to explore deregulation in mid1984 ("Canada," 1984, p. 50). At that time, the Liberal Government of Prime Minister Pierre Trudeau was in power. Later that year, the Progressive Conservative Government of Prime Minister Brian Mulroney came into power, and since that time, a privatization scheme for Air Canada has been initiated (Gaffiney, 1988, p. 46).

The Canadian approach to privatization will leave the government as a major partner in Air Canada, while offering about 50 percent interest in the airline to private investors. This approach to airline privatization is one which many governments in Southeast Asia began to pursue in the mid1980s ("Semi," 1985, pp. 92-93). Since the mid1980s, various airline privatization schemes have been initiated in such diverse countries as the United Kingdom, the Republic of South Afr

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into the regulation of the industry. Under Robson's leadership, the CAB either permitted competition for the first time, or increased competition on what had in the past been either monopoly or nearmonopoly routes. These relatively small changes were viewed as revolutionary in the context of the existing regulatory system (Biederman, 1982, p. 111). In July 1976, the CAB voted permit regulated interstate air carriers to lower fares, so that they could better compete with unregulated (by the CAB) intrastate carriers. This action was followed in February 1977 by a General Accounting Office (GAO) report contending that regulation of the airline industry had cost American consumers approximately $2 billion per year from 1969 through 1974 (Biederman, 1982, p. 21). The report recommended the introduction of greater price competition into the industry and easier entry into the industry for new airline companies. The Carter Administration entered office at about the same time that the GAO report was issued, and soon made clear its intention to continue the experimental approach to airline regulation. Super Saver type fares were soon approved for widespread use in the industry, and the CAB began to (1) actively encourage pr

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