Twenty Years of Airline Deregulation: The Impact on Outlying Small Communities

By Jones, J. Richard | Journal of Transportation Management, Fall 1998 | Go to article overview

Twenty Years of Airline Deregulation: The Impact on Outlying Small Communities


Jones, J. Richard, Journal of Transportation Management


INTRODUCTION

Transportation has long been an area of interest for economists, geographers, logisticians, marketers, sociologists and other students of economic and social development. Indeed, from very early on in the development of this country (as well as others for that matter), transportation has facilitated the movement necessary for some geographical points to flourish as production centers and distribution centers. In addition to sustaining individual consumers who now make their livelihood in those locations, the transportation lifeline connects approximately 20% of the Nation's consumers who live in locations that are depicted as rural. While the urbanization of America has been inexorably proceeding from 5% in 1790 to 25% just after the Civil War to 64% following WWII to 75% in 1990, the information "revolution" is providing the impetus to alter this trend. The question that arises is, can the transportation system meet the needs of these changing times?

Over the decades there have been few who have argued that the U.S. transportation system is not the best in the world. While it is still true that the U.S. system is without equal on an overall basis, there are fears that the quality and quantity of transportation to and from this country's rural areas is on a general decline. Rural transportation, as true with other aspects of rural life, must be considered part of a broad policy base. Numerous policy measures have been proposed to alleviate the pressures on our urban areas; measures involving jobs creation, energy availability, etc. Although certain measures have been suggested to improve our rural transportation system as well, it appears nonetheless that our transport alternatives may be reducing the attractiveness of those towns and villages situated substantial distances from cities. On the one hand, while obtaining goods may be more expensive in outlying areas, this is clearly an economic trade-off made by those living there. On the other hand however, public transportation alternatives to and from small towns are becoming more scarce almost regardless of one's ability to pay

PURPOSE

The purpose of this study is to investigate the impact that airline deregulation has had on small communities in the U.S. in the 20 years that the industry has had economic freedom. While the passage of the Airline Deregulation Act of 1978 (PL 95-204) on October 24, 1978 may be best remembered for the removal of pricing, entry and exit restrictions as they applied to the major domestic trunklines (now major carriers) such as American, Delta and United, the same statute created a need for commuter airline service (now referred to as regional airlines). The question addressed here is how well the small communities are being served twenty years after the fact. Inasmuch as "the national transportation policy statement, a preamble to the Airline Deregulation Act of 1978, specifically calls for a comprehensive and convenient system of continuous scheduled airline service for small communities and isolated areas," (Davis and Dillard 1982) one would expect service in 1998 to be rather like that of 1978.

BACKGROUND

Many scholars consider the transportation and rural community equation to be of crisis proportion. Reich (1987, p.38) envisions this country becoming a bicoastal economy and "if rural America is to be revived, rural transportation will have to become more accessible and efficient." The difficulties associated with rural life and transportation upheavals are well documented (Kihl 1988, Schwab 1987). In a most descriptive fashion, Shultz (1987) envisions (as an outgrowth of deregulation) "an increasing number of small communities undoubtedly will shrivel like corn in a drought."

Airline deregulation as it has involved small communities has attracted the attention of many researchers. Several have focused on the federal subsidy aspect that Congress built into the 1978 deregulation legislation which was supposed to allow communities a decade (but still continues) to prepare for the possible impact of deregulation (Cunningham and Eckard 1987, Vellenga and Vellenga 1986, Addus 1985 and 1984, J. …

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