Deregulation Act Of 1978

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Airline Deregulation Act of 1978 On October 24th 1978 President Carter signed the Airline Deregulation Act. For years the airline industry had been strictly regulated by the government. By 1978 the general public and many government officials had decided that this system was no longer effective and it was time for the airlines to be free from government regulation. The Deregulation Act phased out the governing controls of the Civil Aeronautics Board (CAB), but did not reduce the governing controls of the Federal Aviation Administration (FAA), which controls multiple aspects of air safety. The airline industry as a whole is taken in a new direction by changing the industry for both the consumer and those working within the airline industry.…show more content…
Since 1938 airlines had been subordinate to the rules established by the Civil Aeronautics Board (CAB), a government regulatory agency. This agency was able to set ticket prices, and decide what routes the airlines flied and even market entry for new airlines. The CAB gave airlines minimal business freedom and they developed a reputation for bureaucratic complacency. This complacency meant airlines were often subject to long and drawn-out postponements while applying for new routes or fare changes and in most cases were denied. Case in point of this was when World Airways requested to start a new, low fare New York City to Los Angeles route in 1967; the CAB considered the request for over six years just to reject it due to the record being out-of-date. Another example is when Continental Airlines created a route between Denver and San Diego, which was permitted by the United States Court of Appeals, and ordered the CAB to approve the application after eight years of…show more content…
In 1970 and 1971, the Council of Economic Advisers in the Richard Nixon administration, alongside the Antitrust Division of the Department of Justice and several other agencies, proposed legislation to moderate prices and entry barriers in rail and truck transportation. While this initiative was in process in the Gerald Ford administration, the United States Senate Judiciary Committee, which had jurisdiction over antitrust law, began hearings on airline deregulation in 1975. Senator Ted Kennedy took the lead in these hearings. The airline industry itself did not share the same opinion with the public or members of congress. Smaller airlines companies such as Frontier, Piedmont and Allegheny embraced the idea of deregulation. The airlines saw it as a way to improve and enlarge their companies however; the larger airlines such as TWA, American Airlines and Eastern Airlines were not so excited about the

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