garynorth.com / Gary North /
The American airline industry was de-regulated in 1978 under President Carter, not Reagan.
This forced airlines to change. From this time on, they had to meet customer demand. They were no longer protected by federal law against low-cost fares. The corporate culture of the airlines could not adjust.
There was an exception: Southwest Airlines. It had its origin inside Texas, outside of federal price regulations in its early days. Its routes never crossed state lines, so it was not under the Civil Aeronautics Board’s rate price floors. When deregulation came in 1978, Southwest’s competitors went bankrupt, one by one. They had been designed in terms of federal regulation. They could not compete in the new price competitive environment. Southwest could.
POSTER CHILD OF REGULATION: UNITED AIRLINES
In 1970, United Airlines’ slogan was “Fly the Friendly Skies.” It was meaningless. Robert Poole wrote a classic essay that year for Reason on the need for the de-regulation of the airline industry. The title: “Fly the Frenzied Skies.” Read it here.
In 1979, I wrote an article on free market competition. I also selected another United Airlines’ pre-deregulation slogan: “You’re the Boss.” When United adopted that slogan, customers were not the bosses. Federal bureaucrats were. In 1979, that was no longer the case.
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