The Airline Industry Example

The airline industry operating in America today is vastly different from the way it operated prior to 1978. It was regulated and overseen by the Civil Aeronautics Board (CAB). However the needs of consumers were not being meet under the regulatory influences of the government and pressure was applied for deregulation. In October of 1978 Jimmy Carter dereguated the industry, signing the Airline Deregulation Act of 1978. Enough time has elapsed for a concrete comparison to be made of the industry with regulation and without it.
The decision to deregulate the airline industry was made for numerous reasons; the years leading to its deregulation were not favorable. A middle eastern oil embargo in 1973 aided by inflation caused the price of jet fuel to soar, strangling all airlines. The manner in which the CAB responded was rejected. They allowed airlines to raise fares and restrict compacity, which ultimately did not help the airlines handle the volatile jet fuel. Earnings were sub par during this time for companies in the industry. With signs of improvement ceasing, and continuous rising prices, deregulation became the unanimous solution.
The deregulation process began in November of 1977 when the restrictions of air cargo were lifted. This deregulation sparked the beginning of air express/overnight delivery. The new operating freedoms allowed companies to provide more efficient services, which evoked greater competition, leading to lower prices; greatly benefiting the consumer. Then came Jimmy Carter's signing of the Airline Deregulation Act of 1978. This transferred the control of domestic airfare prices to a free market.
Since deregulation, prices of airfare have steadily declined. The Heritage Foundation has reported that prices have fallen 40% since 1978. This drop in price resulted from fierce competition entering the airline industry, which was welcomed due to the barrier to entry being weakened upon deregulation. The service provided by airliners, however, did not seem to see much of an overall improvement. The government has since passed a number of bills protecting the rights of airline passengers. These are examples of the sort of regulatory services libertarians promote; acting as a referee type figure. Congestion and delays have seemed to bother consumers consistently since the industry's deregulation, as well. This congestion, however, can be viewed as a deregulatory success due to falling prices compared to the increase in consumer volume.
With the current success of the airline industry, and the government working to improve the conditions of its passengers, the future looks bright. Perhaps this industry will one day present itself as the most properly regulated sector in America. ****Does anyone think that the deregulation of the Airlines Industry was actually a detriment?