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The U.S. Airline Industry

The U.S. airline industry was deregulated de facto by the policies of the Civil Aeronautics Board from 1976 to 1978, and, subsequently, de jure by Congress with the Airline Deregulation Act of 1978, based on the rationale that market forces would provide the impetus for increased and sustained competition between carriers, which would further translate into vastly improved quality and quantity of service for the consumer, and at significantly lower cost--a process known as contestability theory. According to Borenstein, for many economists, however, deregulation was simply the rejection of some 50 years of "incredibly inefficient regulation" (53).

The Carter administration actively promoted the deregulation of the airline industry as it had the trucking industry and financial institutions. The Reagan administration's approach to various forms of deregulation was embodied more in the relaxation of safety and environmental controls (which were viewed as being responsible for driving up the cost of doing business), rather than industry-wide deregulatory acts. The Bush administration carried that approach to its apex in the guise of the "Council on Competitiveness" (Kelly 6). And now the Clinton administration has both eliminated the Council on Competitiveness and created the "National Commission to Ensure a Strong Competitive Airline Industry" (Sheehan 84).

The popular media have been quick to focus on the "shakeout" of the airline industry, which has seen as many as 31 national or regional carriers reduced to a mere 14 major carriers since 1978, through mergers or because they ceased doing business altogether (Borenstein 48). Newsweek listed People Express, Piedmont, Eastern, Midway, and Pan Am as "some of the best-known names in the business" which had fallen victim (Solomon and Thomas 68).

A 1992 book by Pulitzer Prize-winning journalists Donald Bartlett and James Steele, America: What Went Wrong?, is highly critical...

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The U.S. Airline Industry. (1969, December 31). In LotsofEssays.com. Retrieved 03:47, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1692491.html