The positive economic effects of deregulation were almost immediate. In their review of service and economic statistics in the period spanning 1978 to 1986, Loeb et al. (1994) reported some impressive outcomes, which they attributed to deregulation. As Loeb et al. (1994) noted, “the average revenue per passenger mile for U.S. air service increased by… 30 percent, passenger miles increased from 226 to 366 billion (62 percent), and passenger enplanements increased by 52 percent” (p. 130). Economically speaking, it appeared that most, if not all, indicators supported the proposition that deregulation would have a positive impact on the airline industry and, by extension, the national economy. Yet such statistics obscured how deregulation affected the other function that regulation had performed: the assurance and enforcement of standard safety and security procedures. As Loeb et al. (1994) conceded, the statistics for this variable were more confounding; it was neither immediately nor convincingly clear that deregulation had been beneficial for safety. Although neither incident nor accident rates increased significantly in the period immediately following deregulation, there were observable and statistically significant changes in some variables that may very well influence safety.

Increases in flights, travel time, and overbooked flights requiring the unanticipated scheduling of additional flights (and staff to operate them), as well as increasing demands on an aging air traffic control system all represented potential threats to safety. In addition, the fact that there was no longer a regulatory body charged specifically with enforcing safety standards meant that the public had to rely upon the good faith and actions of airlines to ensure that they were screening pilots, flight attendants, and ground crew, as well as air traffic control employees, who were qualified to fulfill the duties of their positions. There was no evidence—because no one was collecting it—that such assurances could be offered in full confidence. Although the FAA was not eliminated by the deregulation scheme, its functions changed. It still investigated and maintained records about aviation incidents and accidents; however, its role as a preventive and enforcement entity had changed entirely. It no longer had responsibility, nor did it have full authority, to check with airlines and evaluate their safety policies, procedures, and standards.

Still, enthusiasm about the economic gains that were enjoyed following the deregulation act and the relatively low incidence of incidents and accidents seemed to suggest that aviation safety had not been compromised in any meaningful way by deregulation (Loeb et al., 1994). Just ten years after deregulation, however, incident and accident statistics were beginning to evidence changing trends that began to provoke alarm and raised anew the concerns about deregulation’s impact on safety (Loeb et al., 1994). For each year between 1987 and 1990, incident and accident rates exceeded the rates for each of the years between 1984 and 1986 (Loeb et al., 1994). Loeb et al. (1994) admitted that the increased accident rates were not “sufficient to indicate a rising trend”; however, they urged the industry and other stakeholders to be attentive to the possibility that the accident rates “may nonetheless be the beginning of such a trend” (p. 130).

In addition to the increase in incident and accident prevalence, the “safety margin for air service…[had] deteriorated” following deregulation (Loeb et al., p. 130). Over the long-term, Loeb et al. (1994) argued, these variables constitutive of the safety margin would be more predictive of safety concerns and were worth monitoring in the post-regulation era. During the regulatory period, all airlines had specified and standardized regulations with which they were compelled to comply with respect to operating craft and maintaining airplanes, and periodic examinations by regulatory bodies ensured that aircraft were in operating order (Loeb et al., 1994). Regulatory policy also made specific and standard provisions for training pilots and flight attendants, as well as ground crew and air traffic controllers, and airlines had to comply with both initial and ongoing staff training requirements (Loeb et al., 1994). In the deregulation era, however, airlines could choose whether they would voluntarily uphold such procedures, whether they would adopt new and individualized standards and procedures, or whether they would shortchange their employees and the general public by cutting corners on safety. There were no clear consequences for not maintaining safety procedures as there had been in the past (Loeb et al., 1994).

Although airlines may have wished to uphold the old operating procedures with respect to safety, the new economic realities of the industry introduced pressures to establish cost-containment strategies in a newly competitive environment (Loeb et al, 1994). As Loeb et al. (1994) noted, “Air carriers could afford [high] levels [of safety] in the regulated environment but not in the deregulated environment” (p. 133). To remain competitive players in the intensifying and increasingly populated airline industry, all airlines “engaged in cost cutting in maintenance, training, operations, and wages to some extent to stay viable” (Loeb at al., 1994, p. 133). Another vital link in the safety chain that had been crucial during the period of regulation was the role of the air traffic controller. Yet one of the cost cutting strategies, not performed by airlines themselves but certainly influenced by them, was to limit the employee pool of air traffic controllers (Loeb et al., 1994). As Loeb et al. (1994) reported, “In 1978, there were 16,750 FAA air traffic controllers; by 1987, the number had declined to 12,847” (Loeb et al., 1994, p. 133).

At present, the air traffic control system remains a serious safety concern in the United States, and as Moses and Savage (1989) observed, the nation’s “air traffic control system is woefully inadequate to handle the volume of traffic in the air” (p. 39). Air traffic control towers are understaffed and their equipment and technology are outdated, stretched beyond their realistic operating capacity. Quite simply, the number of airplanes that are operating and the pressure to maintain economic viability by getting and keeping as many planes in the air as quickly as possible is an enormous challenge given the current condition of the industry’s infrastructure (Moses & Savage, 1989). It seems that in the push to deregulate the airline industry, few, if any, of the influential stakeholder groups considered the effect that increased air traffic would have on safety indicators and outcomes (Moses & Savage, 1989). Nonetheless, the industry may be forced to confront safety issues sooner rather than later, imposing internal industry standards for ensuring crew and passenger safety. The increasing number of near-misses on over-taxed runways, where planes are landing and taking off on the same runway in one minute intervals, as well as the number of actual crashes caused by controllable and avoidable factors is causing the public and safety advocacy groups to increase their influence over new policy proposals.

As mentioned earlier, these groups have traditionally been marginalized in policy-making activity in the airline industry, especially regarding safety; however, it seems that this trend is beginning to reverse itself. Airline passengers recognize that it is their valuable dollars that are sustaining the airline industry, as well as the industry of the airlines’ powerful retail partners; therefore, passengers are increasingly willing to use the power of the purse to influence policy-making. Safety cannot be compromised for economic purposes, especially in an era in which service quality has declined and the number of carriers has burgeoned (Doganis, 2001). Passengers can easily take their business elsewhere. In addition, the travel industry, comprised now of travel agencies, travel themed magazines, and travel websites and blogs, is exerting an increasing degree of influence over the airline carriers and the industry at large (Doganis, 2001). As Doganis (2001) noted, customer satisfaction surveys are becoming so influential that airlines are now touting their ratings as “the best” carrier—whether the nomination is for customer service, leg room, baggage delivery, ticketing policies, routes, timeliness, or safety–  in their advertising campaigns. When an incident or accident occurs, an airline’s reputation is immediately in jeopardy, impacting the air carrier’s placement in customer satisfaction polls (Doagnis, 2001). The satisfaction surveys are becoming such powerful indicators of industry performance and customer preference that air carriers are revising their own individual policies and practices to respond to customer interests, demands, and criticisms (Doganis, 2001).

In the wake of the terrorist attacks of September 11, 2001, the airline industry was again confronted with serious economic and safety policy concerns. Airlines were impacted directly by the attacks. The use of airplanes to commit the attacks resulted in the grounding of all air traffic activity for several days and seriously undermined customers’ confidence in the safety and security policies and procedures of the industry. In the years since the attacks, subsequent incidents and terrorist attack attempts have resulted in safety and security policies instituted by the FAA that have created confusion and frustration, as well as occasional relief, among customers. As a result, concerns were raised once again about the role that the government should play in regulating the airline industry (Haunschild & Ni Sullivan, 2002). Six years after the attacks, however, the airline industry has recovered respectably. Although some airlines continue to struggle and some have gone in and out of bankruptcy, airline operators and the traditionally powerful lobbying groups that influence legislators directly have argued that deregulation should be here to stay. Legislators do not seem likely to pursue any new regulatory policies at this time. Policy makers continue to recognize that the airline industry is an important contributor to the national economy, and they would prefer to allow the industry to operate on its own if it can do so effectively and safely, generating benefits of which the federal government is a passive recipient, rather than instituting policies requiring active oversight.

References

Burton, J.R., Zick, C.D., & Mayer, R.N. (1993). Consumer views of the need for government intervention in the airline market. Journal of Consumer Affairs, 27(1), 1.

Doganis, R. (2001). The airline business in the twenty-first century. New York: Routledge.

Dooley, F.J., & Thoms, W.E. (1990). Airline labor law: The Railway Labor Act and aviation after deregulation. New York: Quorum.

Ettedgui, E., Henning, G., Lebow, C.C., Sarsfield, L.P., & Stanley, W.L. (2000). Safety in the skies: Personnel and parties in the NTSB aviation accident investigations master volume. Santa Monica, CA: RAND

Haunschild, P., & Ni Sullivan, B. (2002). Learning from complexity: Effects of prior accidents and incidents on airlines’ learning. Administrative Science Quarterly, 47(4), 609.

Knoke, D. (2001). Changing organizations: Business networks in the new political economy.Boulder, CO: Westview Press.

Loeb, P.D., Talley, W.K., & Zlatoper, T.J. (1994). Causes and deterrents of transportation accidents: An analysis by mode. Westport, CT: Quorum.

Moses, L.N., & Savage, M.I. (1989). Transportation safety in an age of deregulation. New York: Oxford University Press.