In a simple sentence, airline deregulation can be described as the minimization of government control and interference in the affairs and operations of airline companies. A little economics will be introduced in this article to let the user understand the concepts of airline deregulation but not to worry, the subject will only cover the basics of Economics 101. Remember? That compulsory module you were made to take from Junior to Senior High school. According to that course, from time immemorial, consumers are the major movers of any market economy therefore producers try to make it a point of duty to adequately satisfy their consumers while they make their profits by the side. This concept is the same in the airline industry. The deregulation of the airline industry wasn’t much in focus especially in the early to mid twentieth century when aviation began to develop.

During this period, air transportation was far from the reach of ordinary people because of the high cost of airfares. Even the middle class only flew for very important reasons because then, flying was the exclusive preserve of the rich and wealthy. But now, the results of airline deregulation has affected almost everyone because these days, anybody belonging to any class of society can fly to anywhere; if not internationally, then to domestic destinations. Thanks to cheap and affordable discounts on airfares. To explain airline deregulation further, we would use the world’s freest country – the United States of America. In the 50s, everything concerning domestic air travel in the United States was totally under the grip of the United States Government, through the Civil Aeronautics Board (CAB). This airline agency’s duty was to monitor and regulate every aspect of air transport within the country.

The mandate the CAB had was among many, choosing what types of planes would fly within the country’s airspace, allocating flight routes to particular airlines, selection of all airlines’ workers and assignment of job schedules, even the airfares for all routes were decided by the agency. That time, all flights were calculated based on the distances of the trips. In short, everything concerning the airline business had the hand of the government coordinating its affairs. With these, the agency was characterized by bureaucracy, ineptitude, inefficiency, short sightedness in its decision making processes and lots of negative tendencies. After a couple of decades, it came to a time that air transport economics had to be introduced in the running of all the affairs regarding air travel.

So in the late seventies, the United States President, Jimmy Carter engaged the services of a renowned Economist - Alfred Kahn – who was then a Professor of Economics at the prestigious Cornell University. He was to take over the affairs of CAB to ensure that there was a new lease of life in the organization. Fully knowing the retrogression that had been brought about by government policies into the air transport sector, Kahn resolved to deregulate the aviation industry of the United States. This meant that the airline sector had to be loosened from the tight grip of the shackles of government control through its unproductive policies. Kahn went on to apply the positive benefits of Economics to the industry.

October 28th, 1978 marked a historic day in the locust years and was the turning point of the airline industry in the U.S. when President Carter signed the Airline Deregulation Act - ADA - into law. Afterwards, the ADA paved the way for airlines to operate using the laws of Economics. Commercial airlines moved into the industry riding on the back of the ADA. The airline business became driven by free market forces of demand and supply, healthy competition among airlines, etc. The ADA did bring about a complete change where airlines could make their internal policies. Airlines could also decide on the amount of discounts on their air tickets.

In short, government interference was to become minimal or non-existent. In the post-deregulation era, there were airline mergers and acquisitions while passengers felt the impact of the airlines’ prosperity through cheap airfares and air ticket discounts. A few airlines however faced bankruptcy for some reasons and seemed to be reeling from the effects so the U.S. Government took decisive measures to reduce further losses with loan of $10 billion to some airlines. This move reversed their uncertain fate to fortunes; therefore airlines continued to prosper until September 11th, 2001.