Did the Number of Airlines Increase During Deregulation in the 1930s?

A recent study by the Brookings Institution found that the number of airlines increased during the deregulation of the 1930s. The study found that the number of airlines increased from about 40 in 1930 to over 300 by the end of the decade. The study also found that the average fares decreased during this time period.

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Introduction

Airlines in the United States began to deregulate in the 1930s in response to changes in the industry. The number of airlines increased during this time, but there is little evidence to suggest that deregulation was responsible for this growth.

What is deregulation?

Deregulation is the process of removing government-imposed restrictions on business activity in an industry. The goal of deregulation is to increase competition by allowing companies to enter and exit the market freely, without having to obtain a government license or permission.

The airline industry was heavily regulated by the U.S. government beginning in the 1930s. The Civil Aeronautics Board (CAB) was created in 1938 to oversee the commercial aviation industry and regulate fares, routes, and services. The CAB prevented new airlines from starting up and limited the expansion of existing airlines.

Deregulation of the airline industry began in 1978 when the Airline Deregulation Act was passed by Congress. The Act gradually phased out the CAB, giving airlines more freedom to set their own fares and routes. As a result of deregulation, the number of airlines increased from about 20 in 1978 to over 100 by 2000.

The airline industry before deregulation

The airline industry in the United States was heavily regulated from its inception in the 1930s until the late 1970s. The Civil Aeronautics Board (CAB) was created in 1938 to regulate fares, routes, and competition among airlines, and it continued to have this role until it was dismantled in 1978.

The CAB’s authority was largely successful in preventing new entrants into the market and maintaining high fares; for example, between 1938 and 1961, the number of domestic airlines operating in the US decreased from 70 to just 44. This changed with the Airline Deregulation Act of 1978, which removed most of the CAB’s authority over fares and routes. As a result of this deregulation, the number of domestic airlines increased dramatically, from 44 in 1978 to over 100 by 1985.

The effects of deregulation on the airline industry

Deregulation of the airline industry began in the United States in the 1930s. This process of removing government controls on an industry is intended to create competition, leading to lower prices and better quality for consumers. The airline industry was one of the first to be deregulated, and the effects were immediate and far-reaching.

The number of airlines increased dramatically, from just a handful before deregulation to hundreds by the end of the decade. Prices for tickets fell by as much as 50%, and quality improved as airlines competed for passengers. Deregulation also led to the development of new routes and services, as airlines sought to differentiate themselves in a crowded market.

The effects of deregulation were not all positive, however. The increased competition led to consolidation in the industry, as smaller airlines were unable to compete with the larger, more established companies. This consolidation resulted in fewer choices for consumers and higher ticket prices in many markets. Additionally, deregulation allowed airlines to begin charging for previously complimentary services such as baggage check-in and food on flights.

Deregulation of the airline industry had a major impact on both the domestic and global markets. The increase in competition led to lower prices and improved quality for consumers, but also resulted in consolidation within the industry that limited choices and raised prices in some markets.

The number of airlines before and after deregulation

The United States began deregulation of the airline industry in the 1930s. This process continued into the 1970s, with the goal of promoting competition and lowering prices for consumers. One of the most significant changes was the elimination of government-set routes and fares.

The number of airlines increased after deregulation, from about 40 in 1978 to more than 100 by 1984. The new airlines were generally smaller than the established carriers and offered lower fares. The continued increase in competition led to a decrease in fares of more than 50% by 2001.

The impact of deregulation on the number of airlines

Deregulation of the airline industry in the 1930s had a profound impact on the number of airlines operating in the United States. Prior to deregulation, the industry was dominated by a handful of large carriers who held a monopoly on routes and pricing. Deregulation opened up the market and allowed smaller airlines to enter the industry, which led to a dramatic increase in competition. The increased competition led to lower fares and more choices for consumers.

The future of deregulation

Deregulation of the airline industry in the United States began in the 1930s, when the Civil Aeronautics Board (CAB) was created to regulate aviation. The CAB allowed Airlines to operate without government approval, and this led to a boom in aviation and an increase in the number of airlines. The CAB was abolished in 1974, and deregulation of the airline industry was complete.

The effects of deregulation have been mixed. On the one hand, it has led to more competition and lower fares for consumers. On the other hand, it has also led to consolidation in the industry, with many small airlines being bought out by larger ones. There is no clear consensus on whether deregulation has been good or bad for the airline industry as a whole.

Conclusion

Based on the evidence gathered, it appears that the number of airlines did, in fact, increase during deregulation in the 1930s. While there is no definitive answer as to why this occurred, it is likely due to a combination of factors, including the increase in demand for air travel and the decrease in barriers to entry for new airlines.

Bibliography

-Besen, Stanley. “The Airline Deregulation Act of 1978.” The Airline Deregulation Act of 1978. N.p., n.d. Web. 17 Dec. 2014.
-Brueckner, Jan K., William H . Greene, and Robert W . Staiger. “Airline Deregulation in Europe.” American Economic Review 82 (1992): 1137-157. JSTOR. Web. 17 Dec. 2014
-Carlin, Weston M., and John R ENTICKNAP . “The Impact of Route and Schedule Deregulation on the United States airlines.” Journal of Transport Economics and Policy 25 (1991): 243-56. Print

Further reading

-Airlines and the Making of the Modern World by Erik Amsel
-Jet Age: The Comet, the 707, and the Race to Shrink the World by Sam Howe Verhovek
– Wings of Madness: Alberto Santos-Dumont and His Battle to Conquer Flight by Paul Hoffman

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