Aviation Regulation

Aviation regulation is needed to avoid problems such as overcrowded airspaces, flight delays, the danger of merger between large companies, and large companies squeezing out smaller companies. However, not everyone supports aviation regulation. Some people who believe in letting airline companies operate freely, and lobbyist group Cato institute oppose aviation regulation.

    When regulation of airline fares and routes was removed in 1978, air fares decreased dramatically by 40% from 1978 to 2005. As a result, demand for flights is expected to triple in the next 10 years. The number of airline companies has increased too, resulting in overcrowded airspaces, and flight delays. Regulation is thus needed to limit the number of companies, and airline routes.

    The airline industry is top-heavy, meaning that a few big companies dominate the industry. The danger of this model lies in the possibility of merger. If a few large companies merge into a megacarrier, they would have a monopoly of the market. In this situation, there would be less competition, and the large companies would have little incentive to serve their customers well. A monopoly also leaves the customer with less choice of companies. Ultimately, a monopoly of the market would harm the customer. With regulation, the congress would be able to closely monitor the industry, and prevent such situations from happening.

    There have been instances where large companies temporarily lower their prices below cost to squeeze out smaller companies, then raising their prices to normal, or even higher rates. With regulation, congress can make such practices harder.

    Conservatives oppose government regulation in the airline industry. They have historically been in favour of smaller government, and would like airline companies to operate freely. They point to the lower fares, and increased competition as the benefits of deregulation. They are not worried about large companies merging, as similar industries such as the oil industry have not been affected by mergers. They also point out that the larger the company, the better service it can provide, as its costs are reduced.

    The Cato Institute is a lobbyist group that is formed by people who believe in individual rights and freedom. They support smaller government. The Cato institute opposes aviation regulation, as they feel that deregulation lower air fares, and makes it more affordable for Americans to travel. Furthermore, with no regulation, there would be more companies, and that translates into more jobs. They also point out that deregulation leads to more competition, which benefits the consumer.

    The regulation of the airline industry is not a simple issue, and there are pros and cons of regulation. How the government can effectively balance the pros and cons of regulation will determine whether the problem of overcrowded airspaces can be solved while keeping air fares low for everyone.