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Economic Effects of Airline Deregulation

LONG-TERM ECONOMIC EFFECTS OF AIRLINE DEREGULATION

By the mid-1970s in the United States, a variety of events ranging from the Viet Nam War to the Watergate Scandal had cascaded into a loss of confidence in federal government across all segments of the political spectrum (Weissberg 5). In the economic arena, high rates of inflation, economic stagnation, oil shocks, and other misfortunes had caused the federal government's management of the economy to be perceived by many citizens as a failure.

In the midst of the political and economic turmoil which characterized the United States in the 1970s, a momentum for regulatory reform was building. With respect to the airline industry, a momentum for deregulation was building in the face of resistance to such a policy initiative by most of the minor and some of the major American airline companies (Meyer and Oster 10).

The deregulation of the airline industry began to gain acceptance as a policy alternative, as policies began to be implemented in the marketplace. The Civil Aeronautics Board's (CAB) criteria for route assignments began a decisive shift toward the placing of a show cause burden of proof on existing route carriers to demonstrate that an increase in competition would either (1) threaten their solvency, or (2) impair their ability to provide essential air transportation. In October 1978, President Carter signed into law the Airline Deregulation Act. The act included a deadline of 1985 for a congressional determination as to whether or not the CAB should be terminated, and, of course, the CAB was eventually terminated. Deregulation in the American airline industry had arrived.

President Carter in 1976, as did President Reagan in 1980, won the office, in part, by campaigning against the Washington establishment. During this same time frame, neo-conservative economic views were becoming intellectually fashionable. Along with these neo-conservative economic views,...

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Economic Effects of Airline Deregulation. (1969, December 31). In LotsofEssays.com. Retrieved 18:47, March 28, 2024, from https://www.lotsofessays.com/viewpaper/1696926.html