Editing Airline deregulation (section)

==Post-deregulation==
In the wake of deregulation, airlines adopted new strategies and consumers experienced a new market. Below are the marquee effects of deregulation.

===Hub and spoke===
In the immediate aftermath of deregulation, many large airlines adopted a [[hub-and-spoke]] system. In this system, several smaller routes ("spokes") are connected to a single larger route ("hubs") are selected an airport, the hub, as the point for flights from a number of origination cities, the spokes. Because hubs allowed passenger travel to be consolidated in "transfer stations", capacity utilization increased, decreasing costs and lowering ticket prices.<ref name="ReferenceA">Smith Jr F. L., Cox B., Airline Deregulation, The Concise Encyclopedia of Economics, [[Liberty Fund Inc.]], 2. Edition, 2007</ref>

=== Low-cost carriers ===
While deregulation led legacy airlines to switch to a hub-and-spoke model, the old [[point-to-point transit]] model was quickly adopted by the new generation of [[Low-cost carrier|low-cost carriers]] (LCCs) that emerged in the 1970s and 80s. While previously, LCCs such as [[Southwest Airlines]] were only permitted to serve routes that did not cross state borders (placing them outside the purview of the [[Civil Aeronautics Board|CAB]]), deregulation allowed low-cost airlines to choose their own domestic routes, fares, and schedules, increasing competition across state lines and creating new markets outside the two largest states ([[California]] and [[Texas]]). As the cost of flying dropped, the number of potential customers increased, making many smaller routes viable.

===Price===
Base ticket prices have declined steadily since deregulation.<ref name="Maynard">{{cite news| url=https://www.nytimes.com/2008/04/17/business/17air.html | work=The New York Times | first=Micheline | last=Maynard | title=Did Ending Regulation Help Fliers? | date=17 April 2008}}</ref> The inflation-adjusted 1982 constant dollar yield for airlines has fallen from 12.3 cents in 1978 to 7.9 cents in 1997,<ref>{{cite web|title=The Heritage Foundation Mission Statement|url=http://www.heritage.org/about|archive-url=https://web.archive.org/web/20020824173456/http://www.heritage.org/about/|url-status=unfit|archive-date=August 24, 2002|access-date=27 July 2013}}</ref> and the inflation-adjusted real price of flying fell 44.9% from 1978 to 2011.<ref>{{cite web |title=Airline Deregulation |url=https://www.econlib.org/library/Enc/AirlineDeregulation.html |website=Econlib}}</ref> Along with a rising U.S. population<ref>{{cite web |url=https://www.census.gov/compendia/statab/ |title=US Census Bureau |publisher=Census.gov |access-date=2013-10-26 |archive-url=https://web.archive.org/web/20131019204823/https://www.census.gov/compendia/statab/ |archive-date=2013-10-19 |url-status=dead }}</ref> and the increasing demand of workforce mobility, these trends were some of the catalysts for dramatic expansion in passenger miles flown, increasing from 250 million passenger miles in 1978 to 750 million passenger miles in 2005.<ref name="Bamber, G.J., Gittell, J.H., Kochan, T.A. & von Nordenflytch, A. 2009">{{cite book|url=http://www.cornellpress.cornell.edu/book/?GCOI=80140100965480|author =Bamber, G.J.|author2 =Gittell, J.H.|author3 =Kochan, T.A.|author4 =von Nordenflytch, A.|name-list-style =amp |year=2009 |title=Up in the Air: How Airlines Can Improve Performance by Engaging their Employees|publisher=Cornell University Press, Ithaca |chapter=5}}</ref>

===Service quality===
Over the past several years the public's view of airline service quality has shown a significant drop.<ref name="chicagotribune.com">
Johnsson, Julie, ''Airline industry the worst in customer ratings'', Chicago Tribune, May 20, 2008, [http://archives.chicagotribune.com/2008/may/20/travel/chi-airline-consumer-satisfaction-story]</ref> According to the 2008 American Customer Satisfaction Index, a University of Michigan study of 80,000 consumers' expectations and preferences, the major US airlines ranked last among all the industries surveyed. In 2009, the airlines have moved up to being one point ahead of Cable & Satellite TV and the newspaper industry (though results for all industries were not available at the time of this writing).<ref name="theacsi.org">[http://www.theacsi.org/index.php?option=com_content&task=view&id=148&Itemid=156&i=all&sort=Y2007&order=ASC American Customer Satisfaction Index, Scores by Industry, Sep 14, 2009]</ref>

In 2011 Congress finally responded to repeated calls for the United States government to pass an "Air Passenger Bill of Rights" to provide specific requirements about what must happen to air passengers in certain conditions.<ref name="latimes.com">Martin, Hugo, ''Support is growing for a fliers' bill of rights'', Sep 12, 2009, [https://www.latimes.com/business/la-fi-briefcase12-2009sep12,0,7664245.story]</ref> The push for the bill stemmed from several high-profile passenger strandings over the last several years. On April 25, 2011, the Enhancing Airline Passenger Protections rule, 76 Fed. Reg. 32,110, was enacted.<ref>{{cite news|title=Sweeping Customer Protection Regulations|url=http://www.jonesday.com/us-department-of-transportation-sets-airline-customer-service-standards-with-stringent-new-rules-on-us-and-foreign-carriers-05-05-2011/|access-date=23 May 2012|newspaper=Jones Day Publications|date=May 2011}}</ref> Among other items, the rule includes raising the minimum "denied boarding compensation" to customers with valid tickets yet still not allowed to board the aircraft. The legislation further penalizes airlines up to $27,500 a passenger if left stranded aboard an aircraft, on a tarmac for more than three hours.<ref name="bare_url">{{cite news|last=Cameron|first=Doug|title=American Eagle Incurs First Fine|url=https://www.wsj.com/articles/SB10001424052970204190504577038012670211508|access-date=22 May 2012|newspaper=The Wall Street Journal|date=Nov 15, 2011}}</ref> In 2010, the largest [[trade associations]] representing airline management interests before Capitol Hill, [[Airlines for America]] and the Regional Airline Association, opposed this legislation stating that they could self-regulate themselves and they already had begun implementing systems by which to mitigate any tarmac delays.<ref>{{cite news|title=RAA Objects to EAPR|url=http://www.raa.org/Portals/0/FayeGovtPage/FINAL%20-%20RAA%20Comments%20on%20Enhancing%20Passenger%20Protections%20NPRM092310.pdf|access-date=22 May 2012|newspaper=RAA.org|date=Sep 23, 2010|url-status=dead|archive-url=https://web.archive.org/web/20120308051113/http://www.raa.org/Portals/0/FayeGovtPage/FINAL%20-%20RAA%20Comments%20on%20Enhancing%20Passenger%20Protections%20NPRM092310.pdf|archive-date=8 March 2012}}</ref><ref>{{cite web|last=Berg|first=David A.|title=A4A Fights New Passenger Protection Rules|url=http://www.airlines.org/Documents/PaxProtectionsFinal.pdf|publisher=Airlines for America|access-date=23 May 2012|url-status=dead|archive-url=https://web.archive.org/web/20130921061354/http://www.airlines.org/Documents/PaxProtectionsFinal.pdf|archive-date=21 September 2013}}</ref> Later American Eagle, an RAA airline member, was the first airline to be fined under the new legislation. A total settlement including fines and compensation paid to passengers totaled $800,000 for tarmac delays incurred in Chicago in May 2011.<ref name="bare_url" />

Deregulation advocate [[Alfred E. Kahn|Alfred Kahn]] noted a deterioration in the quality of airline service following deregulation, including the "turmoil" of massive restructuring of airline routes, price wars, conflicts with airline employee unions, airline bankruptcies, and industry consolidation.<ref name="jstor.org">Kahn, Alfred E. "Surprises of Deregulation." ''The American Economic Review''. 78 (2): 316–322. {{JSTOR|1818143}}</ref> He also noted unexpected congestion and delays "that have plagued air travelers in recent years".<ref name="jstor.org" /> However, he also argued that such congestion and delays was also a sign of deregulation success (because they were caused by lower prices leading Americans to book more flights).<ref name="jstor.org" /> Kahn considered the turmoil, congestion, and delays to be unforeseen "surprises" from deregulation, but believed they continued to support deregulation in spite of these events.<ref name="jstor.org" />

===Competition among carriers===

A major goal of airline deregulation was to increase competition between airline carriers, leading to price decreases. As a result of deregulation, barriers to entry into the airlines industry for a potential new airline decreased significantly, resulting in many new airlines entering the market, thus increasing competition.<ref name="Maynard"/>

===Effects on airline staff===
A key indicator of the volatility of deregulation<ref name="Bamber, Gittell, Kochan, Nordanflycht 2011 4"/><ref name="Kaps"/> from 1976 to 1986 in the U.S. revolves around employee affairs. Airlines saw a 39% increase in employees (according to [[Alfred E. Kahn|Alfred Kahn]]),<ref name="jstor.org"/> and saw continued yet less rapid growth throughout the 1990s.<ref name="Maynard"/> Subsequently, between 2000 and 2008, 100,000 jobs were shed - approximately 20% - and formerly busy hub airports (such as Pittsburgh and St. Louis) reduced staffing due to a significantly decreased number of flights.<ref name="Maynard"/>

Immediately following the September 11th attacks, the [[Air Transportation Safety and System Stabilization Act]] provided the U.S. airlines with $15 billion in loans and an additional $5 billion in grants by the U.S. government. Despite these loans and grants, nearly every major carrier fired 20% of its staff, with United and American both cutting 20,000 jobs.<ref>{{cite book|last=Thomas|first=Andrew R.|title=Soft Landings: Airline Industry, Strategy, Service and Safety|year=2011|publisher=Apress|isbn=978-1-4302-3677-1|pages=32, 34}}</ref> It is difficult to determine the precise job losses due to the effects of deregulation, given such layoffs. Then-retired former CEO of American Airlines [[Robert Crandall]] stated, "I'm not sure 9/11 by itself had any particular profound impact [on the industry], but it exacerbated the problems they had before 9/11."<ref>{{cite book|last=Thomas|first=Andrew R.|title=Soft Landings: Airline Industry, Strategy, Service and Safety|year=2011|publisher=Apress|isbn=978-1-4302-3677-1|page=33}}</ref>

Although regular pay-cuts had become commonplace in the years following deregulation, of the employees remaining after September 11, 2001, the average pay cut has been 18%,<ref name="Bamber, Gittell, Kochan, Nordanflycht 2011 4"/> with many of the highest earners seeing as much as 40% reductions. Further, virtually every regularly scheduled airline has shifted its pension obligations to its employees.<ref>{{cite news|title=Chesley "Sully" Sullenberger To Congress: My Pay Has Been Cut 40 Percent In Recent Years, Pension Terminated|url=https://www.huffingtonpost.com/2009/02/24/chesley-sully-sullenberge_0_n_169512.html|access-date=14 August 2013|newspaper=Huffington Post|date=2009-03-27}}</ref>

According to a study by economist David Card, deregulation resulted in the shift of approximately 5,000 to 7,000 airline mechanic jobs from the major trunk airlines to smaller carriers between 1978 and 1984.<ref>Card, David. "The Impact of Deregulation on the Employment and Wages of Airline Mechanics." Industrial and Labor Relations Review. 39 (4): 527-538 (July 1986). http://davidcard.berkeley.edu/papers/dereg-emp-wage.pdf</ref> Because such smaller carriers typically pay less than the major airlines, the average hourly wage of airline mechanics decreased by up to 5 percent; however, this decrease is said to be relatively small.<ref>Card, David. "The Impact of Deregulation on the Employment and Wages of Airline Mechanics." Industrial and Labor Relations Review. 39 (4): 527-538 (July 1986).</ref>

===Open Skies===
{{Main|Open skies}}

Beyond the domestic liberalization of the airlines in the U.S., Open Skies agreements are bilateral agreements between the U.S. and other countries to open the aviation market to foreign access and remove barriers to competition. These agreements give airlines the right to operate air services from any point in the U.S. to any point in the other country, as well as to and from third countries.{{citation needed|date=June 2013}} The first major Open Skies agreements were entered into in 1979.

The U.S. has Open Skies agreements with more than 60 countries, including 15 of the 28 EU nations. Open Skies agreements have been successful at removing many of the government-implemented barriers to competition and allowing airlines to have foreign partners,{{Citation needed|date=April 2010}} access to international routes to and from their home countries, and freedom from many traditional forms of economic regulation.{{Citation needed|date=April 2010}}