Winds of Change: Domestic Air Transport since Deregulation

Commercial aviation was one of the first industries affected by the controversial regulatory reforms that began in the 1970s. Beginning in 1975, administrative reforms of the Civil Aeronautics Board gave carriers greater freedom in discounting prices and serving new markets. The Airline Deregulation Act of 1978 removed restrictions on entry, pricing, and routes. Still unresolved in policy and practice, however, is the question of the appropriate role of government. In the interest of informing the public debate about deregulation, the Executive Committee of the Transportation Research Board convened a committee of 15 experts to review air passenger service and safety since deregulation. The findings of the committee and its recommendations are presented in this report. Part I of the report gives a brief history of commercial aviation regulation, discusses the effects of deregulation, and gives an overview of the organization of this report. Part II, directed at the effects and responses in the private domain, addresses changes in airline operations and financial performance, passenger fares and airline service, and barriers to competition. Part III, directed at the effects and responses in the public domain, discusses commercial aviation safety, airport and airway capacity limits, and constraints on the performance of the Federal Aviation Administration. Part IV summarizes the findings of the study committee and presents recommendations for improvement on the following five major issues of concern that emerged from this study: (1) the competitiveness of the industry (its effects on the fares and level of service provided to consumers today and the prospects of reduced competition from further industry concentration); (2) the long-term financial stability of the industry; (3) possible discrimination against consumers of different types or in different parts of the country; (4) the safety provided to the public by airlines and the FAA; and (5) the ability of the federal government to respond to airport and airway capacity constraints.