Before 1978, the Civil Aeronautics Board (CAB) regulated airline traffic in the

Question

Before 1978, the Civil Aeronautics Board (CAB) regulated airline traffic in the United States. The CAB regulated the fares that airlines could charge for trips between destinations and which destinations an airline could service. The Airline Deregulation Act of 1978 introduced competitive forces into the marketplace by allowing airlines to choose their own routes and set their own fares. Since 1978, the unionization rate of airline employees has dropped substantially (much more than comparable industries in the U.S.). Why

Explanation / Answer

The Airline deregulation act of 1978 has opened doors for many airlines to enter the market who were able to provide Airline services at low prices by following different market models like low cost, no frill, etc. Now to maintain this low cost, Few airlines started to hire non-union flying personnels. Now these new employees were having low wages, union fought hard against it.

There were 31 certified airlines in 1977 and 106 in 1985. So there was a tremendous pressure on airlines to maintain low prices due to competition. The pressure from union was also there on airlines. Now this trend was there in full industry, salaries of airline workers were more than other industries so union began to subsequently fall as it was now about survival for airlines due to high level of competition.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.