Is regulation from the government necessary again?
In 1938, the Civil Aeronautics Act was passed by the government to regulate the economic conditions of the airlines. It is evident that since then not very many changes have been made. Though in 1970, very many people were dissatisfied with the regulatory system that led to reformation of the airline.
The government decided to deregulate the airline system. Today, the government wants to regulate the airline system and there are major reasons for this action. The increase rates of terrorism via the airline have made the government intervene in the regulation of airlines (Alexander, 2004).
There is a major theory that can categorize airline regulation in the USA. The public interest is a theory which has been practiced for a very long time by the government. It regulates some things to avoid market failure brought about by externalities, monopolies, economies of scale, pricing of public goods and asymmetric information.
For such reasons, the government needs to regulate airlines to control the price levels, to help in the opening up of particular routes and to subsidize machines that are used for security (Eldad, 2005).
Regulations and Deregulations
The regulations set by the government are a reaction to the bombing on September 11th. The demand of passenger to use the airlines has decreased and the prices of the airlines have greatly increased since the bombing. Passengers have had the fear of using such services in avoidance of such ordeals (Bruce, 2003). This has brought down the economic status of the airlines. Even before the bombing, airlines were making great losses blaming it to the deregulation of the government (Alexander, 2004).
The Civil Aeronautics Act gave the mandate to control airline routes and the prices of tickets. It used to do this to holding the interest of the general public at hand. It is true that deregulation has brought about so many problems in the airline industry. Deregulations made the domestic airlines o fly to any routes.
These airlines also set their own prices and since they were maximizing on profit making, they frustrated the consumer because they were too high. This reduced competition between airlines because the demand of the services went down completely. The airlines stopped operating in the interest of the public and were mainly directed by other operating systems and standards of safety (Alexander, 2004).
Routes and pricing of airline tickets are highly deregulated but the other parts of the airline are highly regulated by the government. The local governments are in charge of regulating services within the local airlines. The local governments in various regions manage the airlines and control the major services that are carried in airlines like safety. Biding is mostly used to allocate gates and it does not use market mechanisms that are formal.
There are some regulations though before they ensure that a particular company has won the bid, the government has to ensure that the company will work for the good of the general public. Deregulations have also occurred in international routes that many countries are negotiating. There have been negotiations to open up skies whish will allow airlines to freely fly to any country. The biggest problem is that the deregulation of international airlines reduces the nature of competitive markets. This is because the deregulation does not allow the transportation of passengers by foreign carriers (Kenneth, 2004).
How have the events of the September 11 attack affected the Airline Regulation
It is important before criticizing government intervention in airline services to critically look at the current safety problems. Terrorism has been on the rampant and it is mostly through the airlines. The September 11th ordeal led to the local governments to come up with safety measures to avoid further attacks using the airlines. This is because many Americans were avoiding the airline in fear of further attacks. The government is also into regulating airline services to increase confidence that its citizens have on it (Bruce, 2003).
For such safety reasons, I feel like it is important for the government to regulate some but not all services offered by the airline. It needs to come up with a pricing system that will attract passengers and that will lead all airlines having fair competition within the sector. It can only achieve this by subsidizing fuel prices to reduce the ticket prices.
This will certainly attract more customers because of the affordable prices. More so, it will reduce the chances that airlines monopolies’ on particular routes. This is because the government has the right to pave way for airlines to use particular routes. This will give passengers the freedom to travel where they really want and not where the airlines want. Moreover, the government will have set up very high security lines in such routes to allow safety (Larry, 2002).
Too many regulations can lead to the airlines having problems economically but at the same time deregulations will lead to the general public having problems. Government regulations are important especially when safety measures come in. it is important to ensure that the airlines have trained staff members who can apply the necessary safety measures to protect people from attacks. It also needs to put strict restrictions to ensure that all airlines have the current technology to deal with safety issues.
For instance use of x-rays to view what people have carried in the airlines, security people to check bags and language from passengers and the fact that no one is accepted to carry any metal substance in the airport. These regulations are set by the government. At the same time it needs to allow the airlines to operate in freewill to allow differentiation of services given by various airlines. This will allow competition between the airlines and business will boom again.
Alexander T., 2004. Deregulations of airlines-1970: airport planning and management. Pp. 73.
Bruce S., 2003. Government regulations control airline security: Beyond Fear-thinking sensibly about security. Pp. 123-150.
Eldad B., 2005. Government regulations, Market structure: Evolution of the US airline industry. Pp. 120-150.
Kenneth F., 2004. No clear way forward for airlines: administrative Law in the Political System. Pp. 300-360.
Larry D., 2002. Some government regulations are harmful: Industry studies. Pp. 230-300.