AVSC 1030 Lesson 3 - Lesson 3 Airline Regulation Prior to...

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Lesson 3 Airline Regulation Prior to October 28, 1978, regulating authority of the airline industry in the United States was under the supervision of the Civil Aeronautics Board (CAB). The CAB, created in 1938, was entrusted with safety, rule making, accident investigation, and economic regulation of the airlines. The CAB regulated domestic air travel through the control of fares, routes, and schedules. In 1938, the Civil Aeronautics Act transferred the Federal civil aviation responsibilities to a new independent agency, the Civil Aeronautics Authority, later called the Civil Aeronautics Board (CAB). The second chairman of the Authority was Robert H. Hinckley, shown at right with Orville Wright. During this time of strict government regulation, the CAB under the direction of the Department of Commerce and after 1958 the FAA under the Department of Transportation, managed to ensure that airlines that provided service to the American public were profitable. This profit safety net provided by the government allowed airlines to be less conservative in their spending and purchase larger more expensive aircraft. Additionally, as with most government agencies the CAB and FAA made it extremely difficult for startup airlines to get their wheels off the ground due to the bureaucratic process. December 31, 1958 the Federal Aviation Administration (FAA) was created. The FAA had authority to establish a unified civil/military National Airspace System backed by an expanded network of air navigation and air traffic control facilities. The CAB however, still had the responsibility to regulate airlines. Although the bureaucratic process assisted the large established airlines by blocking startup carriers, it also frustrated the large carriers and hindered growth due to their inefficiencies in approving new routes. The slow growth the efficiency of the rigid system left airlines discouraged looking for answers to the tough regulations. Regulations Frustrations The CAB regulated the airlines to the point of frustration. The CAB gave approval for service to new locations and had to approve a discontinuance of service to other locations. These were decisions the airlines could not make on their own. Maximum ticket prices, route structures, and equipment assigned to each route were determined by the CAB. They even determined which airlines could fly between each city and the number of times they could fly the route each day. This over control and over regulation on the part of the CAB made it very difficult for airlines to operate anywhere near their potential in terms of efficiency and profitability. This is a 1968 route map for Delta Airlines
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AVSC 1030 Lesson 3 - Lesson 3 Airline Regulation Prior to...

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