{"id":3818,"date":"2018-11-12T09:54:58","date_gmt":"2018-11-12T14:54:58","guid":{"rendered":"https:\/\/doctoraviation.com\/?p=3818"},"modified":"2018-11-12T13:42:11","modified_gmt":"2018-11-12T18:42:11","slug":"biggest-event-in-civilian-aviation","status":"publish","type":"post","link":"https:\/\/doctoraviation.com\/biggest-event-in-civilian-aviation\/","title":{"rendered":"The Biggest Event in American Civilian Aviation"},"content":{"rendered":"

It was the single biggest event in American civilian aviation history in the last 50 years.\u00a0 It changed everything.\u00a0 We just celebrated its anniversary.On October 24, 1978 then President Jimmy Carter (right<\/em>) walked into a press conference with an announcement.\u00a0 The United States was going to pursue deregulation of the civilian aviation industry.<\/p>\n

What is regulation?<\/strong><\/h3>\n

Prior to 1978, the United States airlines were regulated by the government.\u00a0 The move was made in the 1930s by Franklin Roosevelt to get the fledgling industry off the ground (pun intended).<\/p>\n

Beginning in 1938, the Civil Aeronautics Board (CAB) was established.\u00a0 Soon the government regulated all aspects of the airline industry.\u00a0 1) What airlines would be awarded which routes.\u00a0 2) When the flights would depart and land.\u00a0 3) How much could be charged.\u00a0 4) Who could land at what airport.\u00a0 The government called all of the shots.<\/p>\n

The regulation resulted in a very inefficient and expensive system.\u00a0 I remember my Dad coming home from a business trip.\u00a0 He told me that there were about five passengers on his flight.\u00a0 Two of them were his work associates.\u00a0 The stewardess (what we used to call flight attendants) was on her first flight out of training. \u00a0She sat and talked with the passengers and kept asking them if they wanted more food.\u00a0 This particular route was not profitable, but was mandated by the government.<\/p>\n

<\/figure>\n

On October 24, 1978 President Carter announced that all of that would end.\u00a0 The FAA would still regulate the safety of the airlines.\u00a0 However, competition and free markets would determine airline routes, fares, departures and arrivals.<\/p>\n

Who were the winners?<\/strong><\/h3>\n

The primary winners were the customers.\u00a0 Despite the dim view held by some in the United States and particularly the intelligentsia, capitalism does work for the \u201ccommon man\u201d.\u00a0 Free markets bring lower prices for customers.\u00a0 The flying public has been the primary winner in deregulation.\u00a0 Once airlines were allowed to compete for routes, the most popular ones began to drop in price.\u00a0 The reason: more airlines were allowed to fly those routes.\u00a0 Once there was competition on the route, the way to compete was by lowering prices.<\/p>\n

<\/figure>\n

Other winners were new airlines.\u00a0 Since the 1970s many airlines have come into existence such as Frontier, Spirit and Allegiant.\u00a0 Others have grown immensely by competing well.\u00a0 Southwest was a small airline serving less than half a dozen states when it began flying in 1971.\u00a0 Now it is a dominant airline in the domestic market.<\/p>\n

Airline personnel have also benefited.\u00a0 With the advent of new airlines and new routes new jobs were created for pilots, flight attendants, mechanics, air traffic controllers, baggage handlers, etc.\u00a0 Competition helped the aviation pie get bigger for everyone.<\/p>\n

This has a spillover effect as airports grew larger, creating construction jobs.\u00a0 Then industry around the airports grew such as hotels and rental car agencies.\u00a0 The advent of overnight delivery also increased the size of the pie.<\/p>\n

Additionally, deregulation led to the advent of innovative flight programs — Ideas such as credit cards earning airline miles.\u00a0 Frequent flyer programs had been illegal during regulation.\u00a0 They are now the industry norm and enjoyed by thousands of the flying public.<\/p>\n

Who were the losers?<\/strong><\/h3>\n

The only way for an airline to distinguish themselves prior to deregulation was through service.\u00a0 From my observation, in flight service has been one of the few areas to suffer since deregulation.\u00a0 Rather than being seen as luxurious, one often feels like they are part of a herd of cattle.<\/p>\n

In a capitalistic society there are always winners and losers.\u00a0 Who lost in deregulation?\u00a0 I would answer with The Big Three.\u00a0 I am not referring to the three largest US automakers. Rather, three of the largest US Airlines in 1978: Eastern Airlines, Trans World Airlines (TWA) and Pan American Airways.<\/p>\n

<\/figure>\n
<\/figure>\n

The three held dominant positions at the time.\u00a0 Eastern Airlines had many of the most lucrative routes up and down the US eastern seaboard: New York, Philadelphia, Boston and Washington DC.\u00a0 There were led by Apollo 8 astronaut Frank Borman.\u00a0 They had the best routes and the biggest labor problems.\u00a0 Relations between management and labor was legendarily bad.\u00a0 The union was powerful and many said corrupt.\u00a0 If there was going to be a disagreement between leadership and the union in the airlines, you could bet on Eastern.<\/p>\n

Trans World Airlines better known as TWA started in middle American.\u00a0 They had a strong foothold across the United States based off their strategic central hub in St. Louis, very near the center of the country. They supplemented the domestic routes with a strong international offering.<\/p>\n

<\/figure>\n

When it came to international, nobody did it better than Pan American Airways, better known as Pan Am.\u00a0 The pioneered international travel with their Clipper airplanes in the 1930s being the first to regularly traverse the Pacific Ocean.\u00a0 Under visionary leader, Juan Trippe (left<\/em>), they had spearheaded the building of the Boeing 747 (see Session 10 of Doctor Aviation).\u00a0 Their international service was billed as suave and sophisticated.\u00a0 Pan Am conjured up visions of high class.<\/p>\n

So what happened to the Big Three?\u00a0 They had the best routes and also the biggest debt.\u00a0 They had highly leveraged their companies in order to buy more and bigger airplanes.\u00a0 Labor costs were also partially funded in this way.\u00a0 At the time, the huge debt load was \u201cno big deal\u201d, the three had a monopoly on the most lucrative routes.\u00a0 They were \u201cguaranteed\u201d a steady stream of income to pay off the debt.\u00a0 All of that changed on October 24, 1978 when Jimmy Carter signed The Airline Deregulation Act.\u00a0 The rules of the game were altered radically and the three airlines were caught off guard.\u00a0 Carter had given little warning and the three were caught holding huge quantities of debt of which they could no longer afford.<\/p>\n

The Carter Legacy<\/strong><\/h3>\n

Jimmy Carter was among the most personally honorable presidents of the 20th<\/sup> Century.\u00a0 His private life revealed no scandals and he was widely regarded as honest.\u00a0 A trait that we could use more of in political life.\u00a0 However, his presidency is widely regarded as ineffective.\u00a0 He was swept out of office by a Ronald Reagan landslide in 1980.<\/p>\n

Besides his personal character Carter\u2019s greatest legacy is likely his decision to deregulate the airlines.\u00a0 It is not a move generally associated with the Democratic Party of which Carter was a member.\u00a0 However, Carter had the foresight to let the market by free.<\/p>\n

<\/figure>\n

I believe in fairness he should have given more notice and transition to those being affected.\u00a0 Those operating under the historical rules (e.g. Eastern, TWA, and Pan Am) would have had a greater chance of survival.\u00a0 While this could have helped, it cannot be argued that Carter\u2019s decision, overall, has been good for the airline industry and has helped the traveling public.\u00a0 It is cheaper to fly in the United States than in any time in history.\u00a0 This would not have happened without deregulation.\u00a0 Thank you Jimmy Carter.<\/p>\n

 <\/p>\n

For more information see:\u00a0https:\/\/airandspace.si.edu\/exhibitions\/america-by-air\/online\/jetage\/jetage08.cfm<\/a><\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

It was the single biggest event in American civilian aviation history in the last 50 years.\u00a0 It changed everything.\u00a0 We just celebrated its anniversary.On October 24, 1978 then President Jimmy Carter (right) walked into a press conference with an announcement.\u00a0 The United States was going to pursue deregulation of the civilian aviation industry. What is […]<\/p>\n","protected":false},"author":338,"featured_media":1707,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"footnotes":"","_jetpack_memberships_contains_paid_content":false,"jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[39],"tags":[906,899,905,904,901,907,900,589,902,903],"jetpack_publicize_connections":[],"acf":[],"yoast_head":"\nThe Biggest Event in American Civilian Aviation - Doctor Aviation<\/title>\n<meta name=\"description\" content=\"It was the single biggest event of the last 50 years in American civilian aviation history.\u00a0 It changed everything -- it all happened on October 24, 1978.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/doctoraviation.com\/biggest-event-in-civilian-aviation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Biggest Event in American Civilian Aviation - 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