President Jimmy Carter signed the Airline Deregulation Act into law on October 24, 1978, the first time in U.S. history that an industry was deregulated.
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Deregulation of major industries in the United States began in the 1970s and spread to the United Kingdom and, to a lesser extent, to the European continent.
The two most important consequences of deregulation have been lower fares and higher productivity. Fares. Between 1976 and 1990 average yields per passenger mile—the average of the fares that passengers actually paid—declined 30 percent in real, inflation-adjusted terms.
Benefits of Partial DeregulationAfter deregulation, airlines reconfigured their routes and equipment, making possible improvements in capacity utilization. These efficiency effects democratized air travel, making it more accessible to the general public.
President Jimmy Carter signed the Airline Deregulation Act into law on October 24, 1978, the first time in U.S. history that an industry was deregulated.
Although all travelers are now enjoying lower fares, on average, as a result of deregulation, it is clear that travelers at large and medium hub airports have benefited more than those at small and nonhub airports.
After deregulation, airlines dropped cities that had once served as hubs and pulled out of routes that were unprofitable. Their actions caused a ripple effect—when airlines left, business moved too, since their workers and executives couldn't get around the country as easily.
Drawbacks of DeregulationIt can lead to less regulation of important industries, such as the airline industry, which can lead to safety concerns. Deregulation can also lead to job losses in the industries that are being deregulated.
Airline deregulation had begun with initiatives by economist Alfred E.Kahn in the Nixon administration, carried through the Ford administration and finally, at the behest of Ted Kennedy, signed into law by President Jimmy Carter in 1978 as the Airline Deregulation Act.
Air travel has dramatically increased and prices have fallen. After deregulation, airlines reconfigured their routes and equipment, making possible improvements in capacity utilization. These efficiency effects democratized air travel, making it more accessible to the general public.
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