Airline Deregulation

The 1978 Airline Deregulation Act deeply affected the air transportation industry. Fares established by the Civil Aeronautics Board (CAB) based on a uniform rate-of-return regulation prior to deregulation became subject only to market forces. Firms facing bankruptcy were no longer automatically rescued with inflows of federal money. Certificates of convenience and necessity previously required to open new routes were no longer needed. Finally, airlines dissatisfied with some of their less traveled routes could now choose to end service on those routes. These developments led to intense price competition, the entry of numerous new low-cost firms, the development of hub and spokes networks, and the beginning of what some predicted would be a perfectly contestable market. The Airline Deregulation Act spawned the hub and spoke method of passenger delivery as well increasing the level of competition amongst firms causing a decrease in passenger airfares and an increase in carriers'!

Legislatively mandated to promote the air transport system, the Civil Aeronautics Board believed that passengers traveling shorter distances--more typical of travel from small- and medium-sized co

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Approximate Word count = 2707
Approximate Pages = 11 (250 words per page double spaced)