Premium Essay

Deregulation

In: Business and Management

Submitted By hasanali213
Words 895
Pages 4
who deserves a good deal of the credit for it, is a hero of air travel. Last week, writing about the Justice Department's move to block US Airways' planned merger with American Airlines, Mother Jones blogger Kevin Drum highlighted a novel counterargument. Mr Drum says that it is still "an open question whether deregulation was such a boon for the flying public in the first place," and points to a 2012 article by Phillip Longman and Lina Khan.

In that piece, published in the Washington Monthly (where I was once an intern), Mr Longman and Ms Khan argue that airline deregulation has slowly killed mid-sized airports and the cities that depend on them. Here's the thesis:

Over the years, most Americans have adopted a pretty standard line about the results [of airline deregulation]. On the one hand, complaining about the indignities of flying—overbooked, late, or cancelled flights; surly flight attendants; and, more recently, terrible in-flight food service and high fees for checked baggage— has become a staple of American life, much like complaining about Internet providers or health insurance companies. On the other hand, we’ve told ourselves, at least the increased competition has made air travel cheaper. And at least most of us can still get where we need to go by air.But now we find ourselves at a moment when nearly all the promises of the airline deregulators have clearly proved false. If you’re a member of the creative class who rarely does business in the nation’s industrial heartland or visits relatives there, you might not notice the magnitude of economic disruption being caused by lost airline service and skyrocketing fares. But if you are in the business of making and trading stuff beyond derivatives and concepts, you probably have to go to places like Cincinnati, Pittsburgh, Memphis, St. Louis, or Minneapolis, and you know firsthand how hard it has become...

Similar Documents

Free Essay

Transportation Deregulation

...Dean A DeFrank Transportation Principles Embry Riddle University Module Two Deregulation All modes of travel have experienced great changes through the years. Those changes were the government getting out of the travel management business and allowing the free market to determine the course of these modes of travel. The following will describe in simplistic form the effects of deregulation on each mode of travel. Airline Deregulation: The Airline Deregulation Act of 1978 removed government control over fares, routes and creation of new airlines. The Civil Aeronautics Board (the governing body on airlines during regulation) powers of regulation were removed thus allowing the industry to be exposed to market forces. The Act, however, did not remove or diminish the regulatory powers of the Federal Aviation Administration (FAA) over all aspects of air safety. Airline deregulation has enabled more competitive pricing and increased carrier flexibility. Prior to deregulation, airline pricing was regulated by the Civil Aeronautics Board. Additionally, air routes were also controlled tightly. With more freedom, carriers can offer more effective options to those who wish to use airfreight as a means of shipment. Railway deregulation: Railroad Revitalization and Regulatory Reform Act of 1976 eased regulations on rates, line abandonment, and mergers. Four years later, Congress followed up with the Staggers Rail Act of 1980. The most important features of the Staggers......

Words: 576 - Pages: 3

Free Essay

Airline Deregulation

...intellectual well, the Carter Administration acted on the assumption that a freer market would be better able to meet consumer demands, than a government bureaucracy. The federal role is now limited to safety regulation carried out by the Federal Aviation Administration. (FAA) Before deregulation, innovation and change by the airline industry was smothered. It took years for airlines to petition and the CAB to approve new routes. Rates were strictly controlled. It was virtually impossible for new airlines to enter the market. Since deregulation airlines are cheaper to fly, safer, while at the same time the number of passenger miles has dramatically increased. A few facts are illuminating. Price Reductions The average fare per passenger mile is about 9% lower since deregulation. Crandall and Ellig [1] report savings of $19.4 billion per year for consumers. Contrary to conventional wisdom, the Government Accounting Office (GAO) [2] reports that, ``The average fare per passenger mile, adjusted for inflation, has fallen since deregulation about as much at airports serving small and medium-sized communities as it has at airports serving large communities.'' The theoretical possibility that deregulation would be a boon to major markets at the expense of smaller communities has proven ill founded. Improved Service Quantity Reductions in fares spurred middle class families, previously priced out of the air flight market, to fly. In 1997 airlines flew 5.7 billion miles compared......

Words: 525 - Pages: 3

Free Essay

The Impact of Deregulation on the Airline Industry

...The Impact of Deregulation on the Airline Industry The aviation industry in the United States was facing several problems such as falling productivity, high inflation, rising labor costs, higher fuel costs and low economic growth. These problems led to the deregulation of the airline industry in 1978 with the Airline Deregulation Act that removed the various controls that influenced the decision power of the companies. The deregulation lasted about three years and the main objective was to increase competition between airline carriers and lower service prices. The deregulation began with the easing of tariffs and liberalization of routes. During the regulations, customers paid high rates and hadn’t many options because there weren’t many airlines companies. After the deregulation, increased competition, new companies have emerged due to lowering barriers entry of new airlines industries and the price decreased. In this competitive environment, the company has increased its investments in quality and marketing as well as the efficient use of its fleet in order to attract more consumers. Also, the cost control has become a major factor in the management of airlines. However, the rapid growth of the airline industry has triggered some problems like congestion at some airports, travel delays and low runway capacity especially during peak hours of travel. These problems are caused due to increased demand and the lack of investment in some airports. The opening of foreign......

Words: 1307 - Pages: 6

Premium Essay

Has Banking Deregulation Contributed to the Current Economic Crisis and If so How? Can Advertising (or) Marketing (or) Public Relations Help Restore Trust in the Banks?

...Has banking deregulation contributed to the current economic crisis and if so how? Can advertising (or) marketing (or) public relations help restore trust in the banks? Most of the world has been affected by what has been called the global recession. Banking deregulation is undeniably the main cause of the financial crisis. This essay is going to demonstrate why this is by covering key events, which have lead to the crisis, and highlighting some possible marketing solutions to the trust issue that has resulted from it. The Great Depression in the 1930s provoked the US government to introduce new regulations in order to reform banks and ensure that there would never be another crisis of its type again. These reforms came under the name of the banking act of 1933, commonly referred to as the Glass-Steagle act. Crucially most of the new laws meant that retail and investment banks were to be kept separate and investments could not be made if a return was unlikely. However, over 50 years later these laws became more relaxed as the banks were always pushing to be privatized, as they knew they would be able to make more money (Robert Weissman, 2009). It was then believed that the financial world had changed so much since the Great Depression that the regulatory rules were outdated and that the banks would be able to manage themselves, the decision was also influenced by $300 million of lobbying (PBS, 2003). The Glass-Steagle act was revoked in 1999 by president Clinton, this......

Words: 1538 - Pages: 7

Free Essay

Economics in Modern Environment

...Deregulation is when there is a decrease in the barriers of entry to certain industries. This is done by cutting red tape i.e. reducing the amount of bureaucratic processes. This will enable more firms to enter and compete in that specific industry. A reduction in red tape and government intervention will also lead in increase productivity as they do not have to worry too much about the restrictions by the government. In addition, the government can also remove regulations such as health and safety regulations, environmental regulations, and employment protection. More companies will be able to start up in the industry under consideration and this will increase competitiveness. When there is an increase in competitiveness, efficiency will be increased, quality will be increase, price will be decreased, and possibly there will be technological improvements as well. For example, the aviation industry in Europe has gone through a process of deregulation and this has led to the proliferation of many private airlines, including budget airlines (such as Easyjet, Ryanair, Monarch, BMI, Thomas Cook, FlyTui). This has increased the level of competitiveness in this industry and thus, reducing the cost (or improving the services) for consumers. Evaluation 1 There is an increase in the external cost. For example, as there are so many different airlines, people are flying more often, more planes are using the airspace, and this has increased the amount of pollution caused......

Words: 292 - Pages: 2

Free Essay

Miderm

...Midterm 2 Case 3.1 Q1 Government’s decision to deregulate the once highly regulated industry, Enron no longer need to charge regualted price for its gas to customers. The force of supply and demand dictated the price, therefore Enron has higher risk of material misstatement compare to before. The deregulation helped Enron expanded into natural gas trading and financing. And for the first time Enron was allowed to use mark to market accounting for its nature gas trading business. Enron expanded beyond its natural gas business into other markets such as electricity and commodity markets. And it also undertook international projects outside the United States. Such aggressive expansion could elevate the risk of material misstatement. Case 3.2 Q2 The existence of related parties presents additional risks to an auditor because an auditor has to obtain an understanding of management responsibility not just the entity itself by also the related party, the purpose of the related party and the relationship of each related party to the whole entity. It’s more area for an auditor to cover, which means greater audit risk. I think auditor should pay special attention to related party transactions because related parties are under the same management and it is prone to fraud and misstatement. For example one of ALO primary activity was to buy BFO’s overvalue investment so BFA could avoid recording losses. If ALO were an independent company, such transactions would not......

Words: 376 - Pages: 2

Premium Essay

Use of Monetary Policy

...A good deal of the responsibility for the crisis should also be placed on regulatory failure. Consumers were not adequately protected. There was an epidemic of deceptive lending. A lot of victims were elderly. Not all mortgages were fraudulent, of course,. Many people were looking to make a quick profit with little money down. Nonetheless, specialty lenders such as IndyMac Bank of Pasadena (California) set out to make bad loans. Mortgage brokers and loan officers, compensated on sales volume, sold so-called liar or "no income, no job or assets" (NINJA) adjustable-rate loans with false or incomplete documentation. What is evident is that many banks gutted lending standards. Internal credit controls were weakened. Because risky loans command higher interest rates, the business model promised profits in the early years. It was guaranteed to end in disaster. In that sense, it was calculated dishonesty[22] . It is most appropriate therefore that attention is shifting from financial rescue to financial reform, from the short term to the long term. "Management is doing things right; leadership is doing the right things," said Peter Drucker. However, reform requires courage and diplomacy as well as careful thought. Bashing Wall Street is easier than trying to reorganize it. There is a risk that nothing substantive will be done. Doing nothing would be a disgrace since it generates the conditions for another world-wide financial meltdown[28] . No matter what they say in public,......

Words: 461 - Pages: 2

Premium Essay

Role of Ethics

...The Role of Ethics The concept of social responsibility or corporate social responsibility (CSR) is not new within the corporate world but has garnered much press and public awareness in recent years due to a number of firms overlooking ethical behaviors as actions that should be placed at the core. Instead some firms have seen value in disregarding the role of ethics and seeking strategies based upon stakeholder greed for profit and larger market share. This lack of ethics and social responsibility only leads to a great downfall and loss to the community. For example a firm that is no longer doing business because it failed to include the role of ethics in strategic decision-making is Countrywide Financial. The firm simply disregarded the wellbeing of the economic environment and its threshold for creating new loans in order to keep the greed machine working long enough to benefit a few select stakeholders and their agendas (Lecker, 2011). The firm’s founder Angelo Mozilo’s behavior was dubious at best suggesting the firm functioned upon core cornerstone values like accountability and ownership of actions when really leadership was only seeking these actions as pretense to create false social responsibility (Lecker, 2011). Instead leadership was hiding a big scam, a secret that would create one of the worst financial recessions since the Great Depression. In short the role of ethics in this strategy was simply nonexistent. Aguinis and Glavas (2012) see the role of ethics......

Words: 900 - Pages: 4

Free Essay

Deregulation

...Codi Feuerzeig  Economics 104  Professor Robert Pollin  TA: Evelyn Kwakye  May 7, 2015     Deregulation       During the 1970s and 1980s the United States government went through a period of  deregulation.   Deregulation is a reduction of government involvement and control within an  industry.  Did this deregulation lead to the 2008 financial crisis?  This is a hot button topic that is  highly debated and causes a great deal of controversy.  The financial crisis of 2008, known as the  Great Recession, impacted the entire country and practically every individual citizen.  Many  politicians, such as Speaker of the House Nancy Pelosi, look for an easy blame or a scapegoat,  for example, the deregulation by the Bush Administration.  Pelosi has been quoted saying ​ "​ the  Bush Administration's eight long years of failed deregulation policies have resulted in our  nation's largest bailout ever, leaving the American taxpayers on the hook potentially for billions  of dollars" (Gattuso).​   The issue with that statement is that the economic deregulation she speaks  of did not take place during the Bush Administration, but many years prior and the laws of that  time are not controversial in today’s economic situation.  Rather more recent regulatory laws are  to blame for the financial crisis of 2008.      Why did we Regulate in the First Place?    The Great Depression is unopposed when it comes to economic downfalls in the United  States.  The financial h...

Words: 1874 - Pages: 8

Free Essay

Globalisation

...Essay Faculty of European Legal and Political studies Globalisation, global economy and politics Student: Andrej Gorše Mentor: Prof. Jasna Cvijanović April, 2015 About globalisation Globalisation refers to a variety of events that are rapidly changing the world. The machine that powers globalisation, however, is the global economy. At the heart of the global economy are the twin policies of privatisation and deregulation, which national governments have adopted worldwide since the 1980’s. Terms like free market economy, level playing field, monetarism, market economy, and neo-liberalism embrace processes such as privatisation and deregulation. Privatisation is about putting governments out of business. The economic theory behind privatisation is that, Business knows best. In this age of globalisation, our governments cheerfully tell us that they are too incompetent to manage our economy, so as a service to the public they will instead let the free market run it. Then our governments sell off publicly owned businesses and assets, which usually end up controlled by multinationals and financed by public shareholders. Competition within the marketplace rather than government management, we are told, will produce lower prices and better services for consumers. This is called a better standard of living, which implies that the public are better off for having a privatised economy so they should be happy about it. The strange part is that governments......

Words: 831 - Pages: 4

Free Essay

Telefonica Case

...Spain’s Telefonica 1. What changes in the political and economic environment allowed Telefonica to start expanding globally? The changes that were involved in the political and economic environment, which allowed Telefonica to start expanding globally, were privatization and deregulation. Spain’s Telefonica was established in the 1920s being a state-owned national telecommunications monopoly. Soon, the Spanish government privatized it, as well as deregulated the market for Spanish telecommunications. Due to these changes, Telefonica has a reduction in workforce, rapid adoption of new technology and began to focus on the increasing profits. Telefonica began to grow and expand globally. 2. What did Telefonica initially focus on Latin America? Why was it slower to expanding Europe, even though Spain is a member of the European Union? While changes were being made, Telefonica was looking for growth. Latin America also experienced a rapid change of deregulation and privatization across the region. Telefonica focused on Latin America because of similarities in the development of the market, language and culture. Latin American markets were also increasing the adoption rate and usage, including internet and mobile phones. Telefonica was slower to expand in Europe because there had been an implied agreement between the national telecommunications companies that they would not invade each other’s markets. By 2005, this agreement broke down when France Telecom entered......

Words: 478 - Pages: 2

Premium Essay

Management Principles

...and groups that buy the goods and services. Competitors- Organizations that produce goods and services that are similar to a particular organizations goods and services. General Economic-Interest rates, inflation, unemployment, economic growth and other factors that affect the general health and well being of a nation or the regional economy of a nation. Technological-Outcomes of changes in the technology that managers use to design, produce or distribute goods and services. Demographic-Outcomes of changes in, or changing attitudes toward, the characteristics of a population such as age, gender, ethic origin, race, sexual orientation and social class. Political and legal-Outcomes of changes in regulations and laws. Such as the deregulation of industries, the privitization of organizations and increased emphasis on environmental protection. Global- Outcomes of changes in international relationships changes in nations economic, political and legal systems. Changes in technology such as falling-trade barriers, the growth of representative democracies and reliable and instantaneous communications. Sociocultural-Sociocultural environment is a collection of social factors affecting a business and includes social traditions, values and beliefs, level of literacy and education, the ethical standards and state of society. 2.) You manage a Tim Horton's restaurant and want to expand into the United States. How do the forces in your task and general environment pose an...

Words: 494 - Pages: 2

Free Essay

Neoliberalism

...Ece Kıray SOC 578- Week 9 In the article of ‘From discipline to flexibilisation’, the transformation from fordist mode of regulation to postfordist disciplinary is explained. During this transformation the mode of social regulation in social, economic and political evolved until today by influence of globalisation. Fordism is a modern economic and social systems based on industrialized, standardized mass production and mass consumption. The concept is used in social, economic, and management theory about production, working conditions, consumption, and related phenomena, especially regarding the 20th century. Fordist accumulation mechanism did not influence only economic issues. It also regulated social, cultural, political issues in society through advertising, mass media and mass entertainment. Fordist mode of regulation comprised some disciplines to hold society together and proceed properly. It aimed to control individual from their family and community life to work place. Rational control expanded in almost all social areas such as household management, social work, psychotherapy, industrial psychology, etc. Furthermore, the social regulations were concentrated within a national frame. All social areas are controlled and bounded nationally. Thirdly, it was encouraged individuals to be more rational and autonomous for their own decisions through instutions such as family, school, psychology, workplace. In the post-89 era of postfordist globalisation, firstly,......

Words: 656 - Pages: 3

Free Essay

Business Managment

...The FSEU Director of Human Resources states several reasons why the State should not be able to privatize the Department of Transportation Information Systems management department. After analyzing this passage and applying critical thinking, I am able to breakdown the eleven steps used in the book “Asking the Right Questions. To an average thinker, there is ample information within this document that could be used to agree with Ms. Glenn’s’ point of view. To a critical thinker, the information and reasoning must be analyzed as to whether it is considered valid enough to call a “reason”. This document is a perceptive issue because it discusses whether or not something should be opposed, and if this matter is considered right or wrong. Just because this document is a perceptive issue, it does not mean that there are not descriptive assumptions associated. The first step in deciding to agree with the author’s argument is to locate the issue and then find the conclusion. The conclusion in any article, essay or document, is the premise to any other information provided. All facts and reasoning should be based off the conclusion. In finding the conclusion a critical thinker must ask what is Ms. Barbara Glenn trying to prove and what is the main issue? She stated “We must oppose to this act now or we do a disservice to our members and will regret it later.” ( ) this statement helps me narrow down the main issue which leads me to the conclusion. Ms. Glenn is stating a demand......

Words: 2931 - Pages: 12

Free Essay

Privatization of Indian Railways

...India should privatise railways for better efficiency India’s booming economy which is considered one of the fastest growing in the world demands better performance in transportation, especially when it comes to the case of gigantic sloth of Indian Railways (IR)! The behemoth public sector enterprise runs more than 18,000 trains daily and is comfortably one of the biggest rail networks in the world. However, it is yet to economise on the concept of modernisation and automation. In order to make the system more efficient, most of the nations across the world have privatised their mass transportation system. Undoubtedly, a better experience of travelling and transport can only be achieved by private participation and eventually it will also enhance the bottomline that has been looming at $48 billion as of 2009. IR currently suffers from dearth of resources. Sadly, the infrastructure and manufacturing capacity available to IR is never enough to meet the increasing demand of locomotives and wagons! Nor does India stand a chance to meet the international safety standards, efficiencies and finesse of the railway services of Europe and North America! The service efficiency post-privatisation in aviation sector should be replicated by IR for better management. The main chasm between the promise and the delivery is created by the monopoly of IR. Undeniably, competition in Europe has enhanced railway services there in abound. In India, it is astonishing to note that even......

Words: 556 - Pages: 3