The Consequences of Deregulation Policies

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Table of Contents

Abstract
Deregulation and its Consequence
References

Abstract

Deregulation policies are applied in a row of areas connected to the rules of quality and price control in the airport. Its consequences for airports and cargo planes are significantly important as deregulation is one of the economical mechanisms by means of which the government is able to control the developments in the industry of air transporting, and to do so providing the main role for the market mechanisms. In addition, the customers may receive a better service, and do so at a much better price (Winston 2010). It became evident that after the first adoption of deregulation policies in the area of air transportation, the situation in this field improved significantly as it started to be regulated by the market mechanisms, and not by the measures from the government (Cilberto 2010). Thus, the consequences of deregulation policies implementation both for passenger and entrepreneurs are mainly positive and especially evident from the point of view of economic efficiency along with the level of service quality (Winston 2010).

Deregulation and its Consequence

During the relatively recent period, the problem of the necessity to exercise efficient economical management in the area of air transportation has become especially significant especially if to take into consideration some of the negative developments in this area which occurred after the last economic crisis. With regards to the growing problems in the sector of air transportations, the government developed and implemented new deregulation policies directed to growing of competing in this sphere which appeared to be critical for the development of a better set of prices in the industry along with better quality of services.

Speaking about deregulation and its positive developments for the sphere of air transportation, it should be stated that the policies implemented in the airports by the government including passenger and cargo planes appeared to be rather successful for determining service quality along with reasonable and appropriate level of prices. As a result of these policies implementation, there appeared a situation in the area of air transportation when the companies were put into equal conditions by the government which significantly improved the effects of such important mechanisms as competition and the other related market mechanisms (Cilberto 2010). In addition, the representatives from the industry and the other related industries also received their great benefits from deregulation policies as they saw ways of solving those problems which government failed to solve by political measures as a result of the implementation of market measures (Winston 2010).

Discussing the matters related to the history of deregulation policies implementation, the first and the most important date to be mentioned is October 24, 1978. This is the date when the Airline Deregulation Act was approved by the Congress (Cilberto 2010). This act assumed that the government will present more freedom for the market mechanisms in the area of air transportation rather than the usual measures of strict governmental regulations (Winston 2010). The most important feature of this acts effects on the market is in its similar influence on both passenger and cargo transportations (Winston 2010). According to Airline Deregulation (n. d.),

Pressure for airline deregulation had been building for many years, particularly among economists who pointed out, in numerous studies, that unregulated intrastate airfares were substantially lower than fares for interstate flights of comparable distances. However, it was a series of developments in the mid-1970s that intensified the pressure and brought the issue to a head.

This explains the significance of this measure implementation by the government. Namely, the situation in the world market of air transportation needed interference into it, mainly due to the reason of its being complicated by a row of economical mechanisms. In addition, the very important developments were made in the area of cargo shipment in the air. According to Airline Deregulation (n. d.),

Congress took the first legislative steps toward airline economic deregulation in November of 1977, when it gave cargo carriers freedom to operate on any domestic route and charge whatever the market would bear. Congress also declared that one year following enactment of the bill, the CAB could certify new domestic cargo carriers as long as they were found fit, willing, and able. No longer would there have to be the more demanding, and therefore restrictive, finding of public convenience and necessity, as there had been in the past.

Reflecting on all the information related above, it should be concluded that the policies of deregulation actively implemented by the government since 1978 played a vital role in the improvement of the quality of service in the area along with the level of prices. Thus, air travelers became those who actually benefited from these important measures by the government. In addition, the representatives from the industry and the other related industries also received their great benefits from deregulation policies as they saw ways of solving those problems which government failed to solve by political measures as a result of the implementation of market measures.

References

Airline Deregulation.(n. d.). Web.

Cilberto, F. & Williams, J. (2010). Limited Access to Airport Facilities and Market Power in the Airline Industry. Journal of Law and Economics, 53(8): 467-95.

Winston, C. (2010). Last Exit: Privatization and Deregulation of the U.S. Transportation System, Washington, DC: Brookings Institution Press.

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The Consequences of Deregulation Policies

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