Airline deregulation began in the US in 1978, allowing airlines to determine their own fares, destinations and routes. This has led to a drop in passenger fares and the creation of low-cost airlines. However, concerns over mistreatment of passengers have led to calls for a passenger bill of rights.
Airline deregulation refers to government cessionary control over certain aspects of the airline industry for airlines. The United States was one of the first countries to officially deregulate airlines through the Airline Deregulation Act of 1978. The European Union and many other governments have followed suit, leading to a rise in free market business strategies throughout the sector of the skies.
The early use of aircraft technology was geared towards carrying cargo and weapons rather than carrying passengers. Particularly in the United States, aircraft were first used extensively as a transport unit for mail, rather than for commercial flights. Since the Postal Service is a federal industry, it initially made sense to keep airplanes under federal regulation. With the arrival of jet aircraft in the mid-20th century, the major airlines’ focus shifted to passenger flights, leading to severe stress for government agencies set to oversee the industry.
Deregulation of airlines under the 1978 Act allowed commercial carriers to determine their own fares, destinations and routes. In most countries that have implemented some form of airline deregulation, the result has been a significant drop in passenger fares as airlines now have to compete for business. Under many regulatory laws, airlines were given specific routes and had to follow government price guides. Deregulation allows airlines to specialize and tailor their business model and services to create a free market system.
In the European Union, airline deregulation officially began in the late 1990s. The airline deregulation process has encountered some complications in European countries, as many of the government-run airlines, such as Air France, have received taxpayer subsidies and been seen as the official airline of the country. Many of these “flag-carrying” airlines have folded since deregulation policies became standard, as they charge significantly higher fares and fail to forge international partnerships that open up new markets around the world.
One of the most important results of airline deregulation is the creation of low-cost airlines. These startups scale back typical customer service offerings, such as free meals and passenger lounges, in order to offer cheaper fares. By using smaller airports, tightening operating budgets and reducing extra services, low-cost airlines have enjoyed tremendous success around the world.
A big concern with airline deregulation, especially in the wake of atrocious budget airlines, is the mistreatment of passengers. The nightmarish stories of passengers being trapped in planes on runways for several hours or even overnight lead many to believe that government regulation is needed to protect the rights of passengers on board flights. Because government interest often extends only in order to enhance aircraft safety, passengers usually have no legal recourse to sue an airline for mistreatment. Starting in the 21st century, the passenger bill of rights has become a hot topic regarding the industry.
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