Regulation of Passenger Fares and Competition among the Airlines

Regulation of Passenger Fares and Competition among the Airlines

Regulation of Passenger Fares and Competition among the Airlines

Regulation of Passenger Fares and Competition among the Airlines

Excerpt

In October 1975, the Ford administration submitted to Congress its proposal to reform economic regulation of the airline industry, the Aviation Act of 1975. The Aviation Act called for the most comprehensive legislative changes in airline industry regulation since the Civil Aeronautics Act established the basic federal airline regulatory system in 1938.

In submitting the legislation, President Ford stated that its objective was "to ensure that we have the most efficient airline system in the world providing the American public with the best possible service at the lowest possible cost." The proposal was designed to give airline carriers greater pricing flexibility and greater freedom to enter and exit markets. It also proposed to eliminate the Civil Aeronautics Board's authority to approve anticompetitive agreements. In short, the Aviation Act sought to substitute competitive market forces for the public utility type of regulation established in the 1938 legislation and administered by the Civil Aeronautics Board.

This, however, was not the only initiative. Major aviation reform proposals were introduced by Senator Howard W. Cannon (Democrat, Nevada), Senator Edward M. Kennedy (Democrat, Massachusetts), and Congressman Glenn M. Anderson (Democrat, California). The CAB itself submitted a proposal calling for reduced control over entry and pricing. Hearings on aviation reform were held in both the Senate and the House during the 94th Congress. A number of similar proposals have been introduced in the 95th Congress.

The Carter administration has publicly stated its support for aviation regulatory reform. Hearings have been held on this issue in the Senate and have begun in the House. Aviation regulatory reform promises to be a major issue in the 95th Congress.

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