Airline Deregulation Term paper
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Give credit where credit is due. Twenty years ago, the Carter Administration and Congress, behind the ceaseless efforts of Alfred E. Kahn, former chairman of the now defunct CAB (Civil Aeronautics Board), deregulated the airlines, a move that has saved consumers billions of dollars. Drinking large dipper fulls from the Conservative/Libertarian intellectual well, the Carter Administration acted on the assumption that a freer market would be better able to meet consumer demands, than a government bureaucracy. The federal role is now limited to safety regulation carried out by the Federal Aviation Administration. (FAA)
Before deregulation, innovation and change by the airline industry was smothered. It took years for airlines to petition and the CAB to approve new routes. Rates were strictly controlled. It was virtually impossible for new airlines to enter the market.
Since deregulation airlines are cheaper to fly, safer, while at the same time the number of passenger miles has dramatically increased. A few facts are illuminating.
Price Reductions
The average fare per passenger mile is about 9% lower since deregulation. Crandall and Ellig [1] report savings of $19.4 billion per year for consumers. Contrary to conventional wisdom, the Government Accounting Office (GAO) [2] reports that, ``The average fare per passenger mile, adjusted for inflation, has fallen since deregulation about as much at airports serving small and medium-sized communities as it has at airports serving large communities.'' The theoretical possibility that deregulation would be a boon to major markets at the expense of smaller communities has proven ill founded.
Improved Service Quantity
Reductions in fares spurred...
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