FL1TPA
Topic Author
Posts: 225
Joined: Tue May 18, 2004 7:29 am

Regulation/Deregulation - Definitions?

Wed Jun 16, 2004 9:30 am

I don't want to seem like an aviation history idiot, but I keep hearing the terms "regulation" and "deregulation" as they apply to the history of commercial aviation. Can anyone versed in airline facts define what the "regulated" industry was like? How did it differ from the "deregulated" airline industry?

I'm not expecting a full history lesson, but a brief description would be greatly appreciated!

Tim.

<>
"Looks like I picked the wrong week to stop sniffin' glue."
 
ConcordeBoy
Posts: 16852
Joined: Thu Feb 01, 2001 8:04 am

RE: Regulation/Deregulation - Definitions?

Wed Jun 16, 2004 9:39 am

In as basic terms as possible:

"Regulation" is the period up until 1978 in which the USA government almost completely controlled its airlines, where they flew, how much they could charge, etc.

When they became privately-operated companies after '78; they were free of [total] government regulation over their prices, destinations, hubs, and other basic business practices.... therefore they were "de-regulated"


[Edited 2004-06-16 02:44:01]
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
Tango-Bravo
Posts: 2887
Joined: Sun Jun 17, 2001 1:04 am

RE: Regulation/Deregulation - Definitions?

Wed Jun 16, 2004 10:42 am

As stated by ConcordeBoy, the term deregulation as it pertains to U.S. airlines has to do with freedom for the airlines in the area of economic decisions. U.S. airlines remain extremely regulated (thankfully!) in the areas of safety and aircraft maintenance as well as other issues such as disclosures concerning flights not operated by the airline whose designator is used for a flight number (ie codeshares), providing access to their service to physically challenged pax, quoting their lowest fare for flights about which consumers inquire, giving timely refunds when requested by pax holding refundable tickets, rebooking pax effected by flight cancellations or major delays, plus a host of other matters.

[Edited 2004-06-16 03:43:50]
 
FlyPIJets
Posts: 832
Joined: Sat Oct 11, 2003 3:32 am

RE: Regulation/Deregulation - Definitions?

Wed Jun 16, 2004 3:10 pm

"...quoting their lowest fare for flights about which consumers inquire..."

That rule goes away July 1.

"...When they became privately-operated companies after '78..."

All airlines in the US, to my knowledge, have always been private companies. That is, the airlines, even during common carrier route regulation days, were not owned by the government.

<><><><>

Back before "deregulation" in the US, the airlines applied to the US government for rights to fly a route. The US government tried to take the view the US really only had one big giant airline, the common carrier.

This big giant airline was divided into three classes, International Airline, Trunk Airline and Feeder Airline. The individual airlines companies would fall into one of these classes. Routes were divided up and assigned according to what the government felt was best - was the route a trunk route, a feeder route, is there a monoply on the route, etc....

Pam Am was the sole International Airline under the common carrier route regulation, not the sole international airline, however. Under the common carrier regulations, the International Airline was not permitted US domestic routes, but was given first rights of refusal on international routes. If a international route deserved additional service and/or Pan Am decided it didn't want to serve the route, then other US carriers could apply and be granted routes. Thus the term Flag Carrier evolved, still used today. Flag carriers (international airline basically) are separate from the common carrier classes because the term Flag carrier requires additional operating capabilities of airlines/aircraft under certain conditions (long haul, basically).

Understanding how the common carrier route regulation worked is a lot more complicated than this, it was a process that evolved over many years. For example, the International Class was obviously created to accommodate, and approved by, Pam Am.

However, it all ended at the same time.

Today, airlines in the US are pretty much free to choose their routes, subject approval of the airports they want to serve. Routing is now deregulated.

There are, however still common carrier rules. For example, if you inter-line on a routing and your luggage gets lost, common carrier rules dictate which carrier is responsible for getting your luggage to you.


Hope this helps.

[Edited 2004-06-16 08:20:34]
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User avatar
TS-IOR
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RE: Regulation/Deregulation - Definitions?

Wed Jun 16, 2004 7:29 pm


Does regulation has to do with IATA fixed prices ?
 
Tango-Bravo
Posts: 2887
Joined: Sun Jun 17, 2001 1:04 am

RE: Regulation/Deregulation - Definitions?

Thu Jun 17, 2004 1:33 am

"...quoting their lowest fare for flights about which consumers inquire..."

That rule goes away July 1.

---------------
Although my airline employer keeps our staff well apprised of developments concerning fares and DOT rules pertaining to major airlines, I haven't heard about this one. Doubt that anything will change in the real world in this regard -- at least for some time -- as we are thoroughly conditioned to offer our lowest fare on a given flight itinerary.

Will DOT prescribe a revised version of this rule, such as perhaps being required to direct consumers to check our airline's website for our lowest current fares? Or perhaps offering the lowest fare only when specifically requested by callers?






 
FL1TPA
Topic Author
Posts: 225
Joined: Tue May 18, 2004 7:29 am

RE: Regulation/Deregulation - Definitions?

Thu Jun 17, 2004 3:25 am

Thanks to all for your responses! Seems quite a bit more complicated than I had assumed.

Thanks again!  Smile
"Looks like I picked the wrong week to stop sniffin' glue."

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