Airline Deregulation Worked! (For Cargo…)

Whenever anyone’s mad at the airlines, they call for ‘re-regulation’ failing to understand that airlines remain one of the most heavily regulated industries in the world. Airports in the US (outside of Branson, Missouri) are owned by governments. The DOT has special regulatory authority over the airlines (and so there are special rules, that don’t apply in most industries regulated federally only by the Federal Trade Commission). The FAA imposes strict controls over anything even conceivably safety-related.

De-regulation really just meant the government stopped setting prices and determining which routes an airline could fly. And the government purposely set prices high, not low, to ensure profits. And kept airlines from starting new routes and competing with each other.

Nonetheless, while passenger airline deregulation is controversial (since so many of us fly), air cargo deregulation which happened about the same time is far less so.

Scott Mayerowitz spent one night in Louisville (doesn’t have quite the ring as One Night in Bangkok) to see how UPS sorts up to 4 million packages a night off one plane and onto another.

Amazon isn’t quite as impressed, which is why they’re starting their own cargo airline.

Both the UPS feat, and that Amazon would compete, are only possible thanks to the deregulation of air cargo.

As part of a broader deregulatory movement, Congress passed Public Law 95-163 in 1977 essentially to remove economic regulation over the air cargo industry. Soon after, express air services spread across the country, allowing rapid increases in the amount and variety of products shipped.

Before this deregulation, the Civil Aeronautics Board (CAB) oversaw the interstate air transport industry (passenger as well as cargo), controlling entry into both the overall market and specific routes. In the twenty years prior to deregulation, the CAB refused to certify the entry of any new cargo carriers or the expansion of existing ones into new routes and limited the size of plane allowed for air cargo hauls. Thus under this regime carriers such as FedEx, which was classified as an express (rather than cargo) service, could only use small planes even when larger ones were the more efficient choice.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. That video is one of the most amazing thing’s I’ve seen in a while. Thanks Gary, and Scott!

  2. Interesting and cool video! Have to admit I don’t really give cargo airlines much thought, guess I just take for granted all the shipping conveniences we have nowadays.

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