be lost, travel agency commissions may be placed at risk, and travel agents may incur liability for traveler claims. Between the end of the Second World War and the early 1980s, the bankruptcy of major American airlines was almost unknown. While a charter company failed from time to time, neither air travelers nor travel agents were exposed to signif icant risk from the potential for airline bankruptcy. In the 1980s, however, this situation changed.
Much of the problem of airline bankruptcies in the United States may be traced to the deregulation of the air transport
3 industry in this country. In an economic context, the problem facing the country with respect to air passenger travel is the provision of adequate and safe air transportation in an econom ically efficient manner. Until the late 1970s, the solution approach to this problem was the regulation by government of the airline industry. Subsequently, the solution approach has shifted to deregulation.
The commerical airline industry in the United States received its start in the mid 1920s from the airmail contracts let by the federal government [7: 679]. From this start, the airline operators were able to gradually add passenger carrying routes and, later, freight carrying operations, to supplement mail delivery. Several airline companies flourished in the 1920s. Companies which were to later become American, Eastern, Pan American, United, Delta Air Lines and Trans World Airlines (TWA) got their starts in the last half of the 1920s [7: 666 677].
Most of the new airline companies began to flounder soon after they were founded. In the mid and late 1920s, Herbert Hoover (later to become president of the United States) was the Secretary of Commerce. He witnessed the financial and opera tional disasters which were occurring in the new industry, and he had drafted and pushed through Congress the Air Commerce Act of 1926 [4: 81]. The Act brought federa...