Three Perspectives on Airline Regulation and Deregulation: Historical, Analytical and National Interest

Governments have used regulation and market forces to control the performance of their airlines for both domestic and international traffic. The balance of emphasis placed on these two instruments of control has varied among nations and over time. Recently, there have been strong pressures to alter, lessen or even remove regulation. These pressures arise in part from the economic evolution of the industry to a more mature phase of growth and in part from the policies of certain nations, especially the United States, which moved radically in the direction of market reliance through its 1978 Deregulation Act. In 1984 Canadian policy shifted in a similar direction but to a lesser extent. Chile introduced deregulation in 1979 and in 1983 New Zealand made a major change towards deregulation. In Europe serious policy deliberations have been directed towards the liberalization of the air transport network. A variety of nations in Europe, Asia and North America have attempted to lessen restrictions on international air traffic movement. The past decade represents a new phase in commercial aviation development in public policy towards airlines. Controversy about policy shifts towards increased control of the airline industry by markets has often been by opposing opinions. This paper will provide a combination of perspectives for a balanced interpretation of such policy changes in the airline industry.