Have you ever questioned why you dread the flight before going on your vacation or trip? Have you ever wondered why your suitcase belongings are a mess when you get your bag back once you’ve reached your destination? And whatever happened to airlines giving out those complimentary cookies and milk? You can blame deregulation for all of these concerns.
Deregulation occurs when the government lessens or removes restrictions on industries. The goal of this tactic is to enhance the simplicity of doing business and decrease monopoly. It rids a regulation which could potentially hamper with firms' ability to compete, in particular overseas.
Being said, in the 1960s and 1970s, the Civil Aeronautics Board set harsh rules for the airline industry since it was a generally new business. The board organized routes and set fares for the companies. In return, it promised a 12 percent profit for any flight that was at least 50 percent occupied. Consequently, airline travel became so overpriced that 80 percent of Americans had never flown in an airplane. Yet, on October 24, 1978, the Airline Deregulation Act offered a solution to this predicament. Safety was the only part of the industry that would be controlled. Therefore, fares dropped, competition rose and more people took to the skies. Over time, many companies could no longer compete; they either were merged, acquired or went bankrupt. This is why today solely four airlines control 85 percent of the U.S. market, being American, Delta, United, and Southwest. Ironically, deregulation has created a near-monopoly.
This is where the consumers come into play. Today airlines are getting stingier and more manipulative when it comes to the Airline Deregulation Act. Now, airlines charge for things that used to be free, such as food, ticket changes and luggage. They have also caused customers to undergo cramped seating, crowded flights, and long waits just because they can do so and still make profit. For example, Milwaukee's Midwest Airlines, which was known as "the best care in the air", and provided those warm chocolate chip cookies that airline passengers savored has faded into history, swallowed up by it’s bigger competitors. Instead, they have been replaced with crackers and breakfast bars which those flying economy will have to pay $1 for. In this case, the consumer is forced to give up goods which make flights more tolerable, also known as the opportunity cost, for “cheaper” flights which may not actually be as cheap as they are advertised. As you can see in the chart below during the past few years major airline companies have been raising flight prices. In fact, Southwest Airlines average ticket price had nearly doubles in the span of a year.
All in all, as large airline companies are relishing in all-time high profits and steady operating costs we are stuck with subpar service, reduced quality of flight and higher fees on food and drinks. Which just goes to show how big name brands tend to take advantage of loopholes and regulation flaws, and also explains why you often times dread your flight.
Pabst, Georgia. “Last Crumb of Midwest Disappears.” Journal Setinal, 1 Apr. 2014, archive.jsonline.com/business/frontier-airlines-says-goodbye-to-the-cookie-ap4qm28-145716075.html/.
Wyman, Oliver. “Airline Economic Analysis 2016-2017.” Oliver Wyman - Global Management Consulting Experts, Nov. 2017, www.oliverwyman.com/our-expertise/insights/2017/jan/airline-economic-analysis-2016-2017.html.
Amadeo, Kimberly. “Why Airline Travel Is So Miserable, and Other Effects of Deregulation.” The Balance, 22 Feb. 2018, www.thebalance.com/deregulation-definition-pros-cons-examples-3305921.