Prior to the Deregulation of Airlines Act of 1978, all commercial airlines were heavily regulated by a government body called the Civil Aeronautics Board (CAB). The CAB established the prices of all air fares, flight routes and flight schedules. The CAB favored short flights and priced them at very low fares by imposing very high fees for long flights in order to subsidize the short flights. An airline had to request fee increases and changes to flight routes, which could take months and were not always approved.

Congress decided that the rein the CAB had over the airline industry was too tight and led to bureaucratic inefficiencies. Congress hoped that the deregulation of airline industry would lead to the following changes in commercial flights:

1. Airline deregulation would lower airfares by competition between carriers.

2. Airline deregulation would encourage new carriers in new areas to expand choices and services for consumers.

3. Airline deregulation would encourage existing carriers to establish new flight routes to expand services.

Action Steps
The best contacts and resources to help you get it done

Take advantage of increased airline competition due to airline deregulation

Deregulation in airlines has lead to lower airfares for consumers due to increased competition between the airlines. Commercial carriers realize that they have to fight for your business and the way to do this is to provide the lowest airfare possible.

I recommend: Innovative marketing has made the airlines offer frequent flier programs as a way to get you to fly with them. The programs are designed to encourage carrier loyalty that will offer the consumer discounted airfares or seat upgrades which is a major advantage of the deregulation of the airlines for consumers. FrequentFlier.com lists all major carriers with their program profiles. Sign up at WebFlyer.com to receive a weekly newsletter filled with the latest bonus programs for frequent travelers.

Find out why hubs are one of the most important airline deregulation advantages

Deregulation in the airline industry lead to the creation of airline hubs which are airports that the carrier will use as a transfer point to move fliers to their final destination. You cannot get direct non-stop flights from the east coast to the west coast, so each airline will have a hub where passengers will have to land in another city to change planes before getting to their intended destination. This ensures the carrier will be able to fly full planes, which will in turn trickle down to the consumer in the form of lower airfares.

I recommend: Check out Today in the Sky, which lists airlines and their major and secondary hubs. Find a report on the effects of deregulation on the airlines as it relates to hub airports from the U.S. Government Accountability Office.

Discover the consequences of airlines deregulation

Most airlines shut down routes in less profitable areas that provided passengers flights to smaller cities in favor of more profitable routes, and as a result, the government had to step in to subsidize these routes it considers essential air service. Over 160 airlines have filed for bankruptcy since the deregulation of airline industry in 1978. When airlines go out of business, it makes for further consolidation of the commercial airline industry, which is not a boon for consumers.

I recommend: Bookmark Evan Sparks’s Aviation Policy Blog for his take on essential air service. For some pros and cons of airline deregulation, check out The New York Times article on the subject.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  The deregulation of the airline industry allows each carrier can stipulate how many bags and the size of your carry-on luggage each passenger is allowed. Always check with your carrier prior to your flight so that you know what you are allowed to take on board and how heavy your checked bags can be. You can be assessed a large fine if you have too many bags or if your bags are over the weight limit.