Airline Deregulation Act - Legislative Terms

Legislative Terms

Senator Howard Cannon of Nevada introduced S. 2493 on February 6, 1978. The bill was passed and was signed by Carter on October 24, 1978.

The stated goals of the Act included the following:

• the maintenance of safety as the highest priority in air commerce;
• placing maximum reliance on competition in providing air transportation services;
• the encouragement of air service at major urban areas through secondary (nonprimary) or satellite airports;
• the avoidance of unreasonable industry concentration which would tend to allow one or more air carriers to unreasonably increase prices, reduce services, or exclude competition; and
• the encouragement of entry into air transportation markets by new air carriers, the encouragement of entry into additional markets by existing air carriers, and the continued strengthening of small air carriers.

The Act intended for various restrictions on airline operations to be removed over four years, with complete elimination of restrictions on domestic routes and new services by December 31, 1981, and the end of all domestic fare regulation by January 1, 1983. In practice, changes came rather more rapidly than that.

Among its many terms, the act did the following:

• the CAB's authority to set fares was gradually eliminated;
• the CAB was required to expedite processing of various requests;
• standards were liberalized for the establishment of new airlines;
• airlines were allowed to take over service on routes underutilized by competitors or on which the competitor received a local service subsidy;
• American-owned international carriers were allowed to offer domestic service;
• the evidentiary burden was placed on the CAB to block a route as inconsistent with "public convenience";
• the CAB was prohibited from introducing new regulation of charter trips;
• terminated certain subsidies for carrying mail were terminated effective January 1, 1986 and Essential Air Service subsidies effective 10 years from enactment (however, as of 2009, the EAS is still in existence, serving 146 communities in the US);
• terminated existing mutual aid agreements were terminated between air carriers;
• the CAB was allowed to grant antitrust immunity to carriers;
• the FAA was directed to develop safety standards for commuter airlines;
• intrastate carriers were allowed to enter into through service and joint fare agreements with interstate air carriers;
• air carriers, in hiring employees, were required to give preference to terminated or furloughed employees of another carrier for 10 years after enactment; and
• remaining regulatory authority were transferred to the United States Department of Transportation (DOT) and the CAB itself was dissolved in 1984.

Safety inspections and air traffic control remained in the hands of the FAA, and the act also required the Secretary of Transportation to report to Congress about air safety and any implications that deregulation would have in that matter.