Deregulation Of Aviation Essay

1679 words - 7 pages

The airline industry has been subject of intense price competition since it was deregulated, and the result has been a number of new carriers which specialize in regional service and no-frills operations. These carriers typically purchase older aircraft and often operate outside the industry-wide computerized reservations system. In exchange for these inconveniences, passengers receive low fares relative to the industry as a whole. This research examines two low fare air carriers, ValuJet and Southwest Airlines. By investigating these air carriers, we can better understand the economic impacts of price versus service in the airline industry as a whole, as well as, the impacts on passenger and investor confidence.Until 1978, air transport rates were approved by the government, which meant that price was not a primary competitive factor. Instead, airlines would compete on service and image. The airline industry was dominated by giants (American, United, TWA) which offered nationwide and some international service, and by regional carriers, such as Southwest, which offered short trips between airports not served by the nationals.Deregulation of the airline industry brought about in 1978 introduced a situation in which the national and regional carriers were suddenly able to compete in an environment that resembled a free market. Rate schedules were lifted, price fixing was eliminated and route management was removed. The main factors that affected whether an airline could serve a particular city was whether or not that city had enough gates for the new carrier, and whether the carrier was able to afford to purchase them. Companies such as Southwest recognized potential for low fares, and began building a niche for themselves by offering low fares with equivalent low levels of service. Southwest's success gave rise to a new generation of low fare airlines, with ValuJet entering the market in the early 1990's. Unfortunately, ValuJet suffered a string of accidents which brought the future of this air carrier into question.ValuJet is a low-priced airline that offers inexpensive tickets for regional travel. Based in Atlanta, the airline serves the Southeastern United States and competes with Continental Airlines as well as with other small regional carriers. It serves 31 cities primarily in the southeastern United States. The airline began its service with flights to Tampa and Orlando from Atlanta in 1993. The no-frills strategy paid off for the fledgling airline, which posted half again as many revenue passenger miles in April 1996 as it did in April 1995. However, the company announced that it was slowing the expansion of its services, voluntarily, at the same time that it posted this impressive revenue mark (Cole & Pasztor, 1996, p. A6).Perhaps due to overexpansion or to poor luck, Valujet experienced a series of mishaps in its short history. In January 1994, a DC-9 skidded off a runway in Washington which resulted in the entire airport being shut...

Find Another Essay On Deregulation of Aviation

avaitionindustry analysis

1684 words - 7 pages entrants unlikely LOW Threat of Substitutes -People preferring air travel will not opt for rail or road -The journey duration is higher in substitutes as compared to air travel LOW PESTEL Framework Political Deregulation of Indian aviation sector: The government in the year 2003 deregulated the airlines industry which impacted the overall operations and structure of airline companies. It enabled many business houses to start their airlines

The History of Air Canda Essay

1335 words - 6 pages the world to use a computer reservation system with remote terminals known as ReserVec(Flyvertosset's Aviation Blog, 2013). In January 1965, the airline’s name was then changed from Trans- Canada Airlines to Air Canada (Flyvertosset's Aviation Blog, 2013). Next, we move into the turbulent rising of the 1980s into the 1980’s. Following the 1980’s deregulation of the Canadian airline market, under the National Transportation Act in 1987 this

Australian Domestic Market: Australian Aviation Industry

2332 words - 9 pages For approximately the past 20 years, since the deregulation of the Australian Aviation industry, the Australian Domestic Market has been profitable. The past half year has brought to light the first negative effects of fierce competition between Australia's airlines the Qantas group and Virgin Australia Holdings Pty Ltd (VAH) (which will be further referred to in this document as Virgin Australia) in the form of loss which can be seen in the

Air/Aviation Law an Expanding Field of Study in India

3596 words - 14 pages on 23 Feb. 2010; See also Paul Stephen Dempsey, the Role of the International Civil Aviation Organization on Deregulation, Discrimination, and Dispute Resolution, 52 J. AIR L. & COM. 529 (1986-1987) Ibid. RY Jennings, International Civil Aviation and the Law, 22 BRIT. Y.B. INT'L L. 191 (1945); See also George Gleason Bogert, Problems in Aviation Law, 6 CORNELL L. Q. 271 (1920-1921). Association of Private Airport Operators, Civil

New Zealand Aviation

2449 words - 10 pages ). ACKNOWLEDGE §NZ Heralds Newspaper §Yahoo News Yahoo searching §Deregulation the Airlines By Elizabeth E Bailey David R Graham Daniel P Kaplan §Air Transport Economics By Alan H Stratford §The history of New Zealand Aviation By Ross Ewing & Poss Macpherson §Global Airlines By Pat Hanlon §A century of aviation in NZ By Paul Harrison &Brian Lockstone §World's major Airlines By David Wragg §http://www.airnz.com

United Kingdom's Advanced Aviation System

1139 words - 5 pages century a golden age for UK passengers and businesses that rely on aviation. The UK has become an increasingly challenging environment for airlines to operate in. industry deregulation, oil crisis, terrorism threat, global financial crisis, euro crisis and numerous industrial actions are some of the challenges that have confronted the industry. Consequently, a number of UK airlines did not survive and others merged with or were acquired by other

Airline Industry

1289 words - 5 pages and even the merger in the industry till forty years. Then Airline Deregulation Act 1978 was adopted to make the industry more efficient and privately owned. This act removed the powers of CAB, thus this institute was wound up in 1984. This act still gave the authority of regulating air safety to government through Federal Aviation Administration. All airline need to have 2 certificates, 1. Fitness certificate (issued by Department Of

Deregulation of the airline industry A complete study of the changing trends of the airline industry and the deregulation affects

2301 words - 9 pages forces as the arbiter of fares and service.Two decades ago, supporters of the status quo predicted that deregulation would result in higher airfares, poorer quality service, and a deterioration of safety. Supporters of deregulation understood that the new aviation free market would not unfold without some pain. They predicted that a deregulated environment would likely produce new carriers while some established airlines failed. Some communities

Personal Marketing Plan Personal SWOT Analysis

2383 words - 10 pages IntroductionUpon completion of my undergraduate degree in Aviation Management, I will pursue a career with a major airline. Not only will I realize a life long dream but also it will be a personal accomplishment in an academic road that was often complicated. Ideals may change, values do not and some things just take a little more time to achieve.Situation Analysis*Significant Life EventsEmbry Riddle Aeronautical University in Prescott, Arizona

Geography & Aviation

977 words - 4 pages from the privatization and deregulation of the airline industry. Since the 1970s, many formerly state-owned carriers, such as Singapore Airlines and Australia's Qantas, have been at least partially privatized, and governments have loosened regulations that once limited the number of airlines on particular routes, the capacity they offered, and the airfares and air cargo rates they levied. Geographers have analyzed the consequences of these

Strategic Analysis of EasyJet

8135 words - 33 pages Seite 18/53 C:\Users\rf\Documents\A R C H I V 311013\F I R M E N R E I N H A R D 301109\MBA FILES 160108\B820_Strategy\TMA\TMA01\TMA01_B820rf.doc Druck: 20.11.13, 22:42 Appendix A: Summary of Internet Research Changes in the Environment in connection with deregulation Aviation is one of the most fundamental industries to globalisation. Low-cost, safe, and efficient jet travel has influenced the expansion of trade and economic integration

Similar Essays

Aviation Oversight Essay

888 words - 4 pages Without the federal government’s direct oversight of development in aviation, much of the technology and advancements we utilize today would not be available. Previous to the Deregulation Act of 1978, the Federal Aviation Administration (FAA) monitored and controlled nearly every aspect of the industry. It wasn’t until after the act was released, did the aviation industry begin seeing its true potential in transportation. By the early 1900’s

Airline Deregulation: Success Or Failure? Essay

1284 words - 5 pages witnessed. Airlines have risen and fallen. Both pre and post-deregulation airlines have found tragedy and success, however the market currently speaks loud and clear that air travel has doubled and fares have dropped; allowing air travel affordably for them majority of all Americans. The airline industry has clearly prospered since deregulation. Of course some form of regulation still exists. The Federal Aviation Administration (FAA) still regulates

Mooney Aviation Company Essay

2246 words - 9 pages profits, offering the best or high quality airplane services to its clients. In addition to this, Mooney Aviation Company encourages its employees to be creative and innovative thus enhancing their personal growth. Apart from being friendly, Mooney Company treats its employees with a lot of care, respect, and warmth thus enabling them to offer quality services to their clients (Ganson, 2014). Although this company went bankrupt in 1930 following

Significant Developments In The Regulation Of Air Travel

1157 words - 5 pages In December 1903 at Kitty Hawk, North Carolina, Orville and Wilber Wright were successfully in their attempt to fly a heavier that air contraption. This event was labeled in history as the “birth of aviation”. The flight occurred in a field which did not have a paved runway and only enough room to take off and land. Additionally, they had no lights or terminal. More importantly they had no regulatory governing body to oversee operations