Thirty-five years ago, the U.S. airlines entered a new year for the first time unshackled from Uncle Sam – thanks to passage of the Airline Deregulation Act in late 1978. Until then, the airlines had been operated much like a public utility, with the feds telling them where they could fly and how much they could charge for the service. Under deregulation, rules like those went to the scrap heap.
Actually, the airlines weren't totally freed. For instance, the carriers still have to comply with government safety rules. And new airlines trying to enter the marketplace still have to be OK'd by various agencies. And Congress can still get into the act, as it did by putting the industry's performance in the likes of flight delays, lost baggage and denied boardings under monthly scrutiny.
So, did the mantra of “less regulation, more competition” pay off? Did the flying public get better service and lower fares? Did passengers get to fly to more places, and with a choice of airlines to take them there? Did these and all the other promised fruits of “the new competitive environment” really come to pass?
Ask some airline workers and a whole bunch of scholars and politicians known for their savvy on subjects like these, and chances are their answers will be all over the map.
One thing is for sure: What began as the shockwaves of “the new competitive environment” turned into nothing less than a full-blown tsunami for the half-million employees of the airlines at the onset of deregulation.
Back then, there were 11 big “trunk” carriers, eight smaller “regional” carriers and a handful of even smaller intra-state carriers.
Over the following years, seven of the eight regionals were either gobbled up by the big guys or otherwise bit the dust. And only a few of the original biggies are still flying under their own name.
Among the 11 old-time trunks, Delta took over Northwest and Western, American acquired TWA, and United teamed with Continental. Pan Am bought National, then was sold in parts to other airlines. The other two, Eastern and Braniff, had to fold their wings and went out of business.
About that seventh regional: 35 years ago it was called Allegheny. After deregulation it changed its name to USAir and then, after a transatlantic expansion, to US Airways. In 2005, US Airways merged with a post-deregulation startup airline called America West, and the combined airline took the name US Airways. Most recently, US Airways got together with American to become the largest airline in the world (under the name, American Airlines Group).
Among other major post-deregulation developments, Southwest, which had been one of the smaller intra-state airlines, today is one of the country's largest airlines.