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Program Web Address

www.unlv.edu/hote

Abstract

In his dialogue - Anarchy In The Airways - Joseph C. Von Kornfeld, Assistant Professor, College of Hotel Administration, University of Nevada, Las Vegas initially states: “Deregulation of the airline industry has brought about financial vulnerability for the traveling public. The author analyzes the situation since that point in time and makes recommendations for some solutions.”

In this article, Assistant Professor Von Kornfeld, first defines the airline industry in its pre-regulated form. Then he goes into the ramifications and results of deregulating the industry, both in regards to the consumer, and in deregulation’s impact on the airlines themselves.

“The most dramatic consequence of the pressures and turbulence of airline deregulation has been the unprecedented proliferation of airline bankruptcies,” Von Kornfeld informs.

“Prior to the deregulation of the U.S. airline industry in 1978, U.S. air carriers operated in a business environment that was insulated from the normal stresses and strains of open competition. They were restricted from actively competing with fares and routings by the Civil Aeronautics Board (CAB),” Von Kornfeld says.

In leveling the playing field, Von Kornfeld offers, “Each carrier was restricted to specific geographic routes, with those routes limited to two or three competing carriers.

The only thing that set carriers apart in this CAB defined atmosphere was their ability to either advertise, or to enhance their level of service; or both. “…ultimately paid for by the passenger through fare increases sanctioned by the CAB,” Von Kornfeld states.

“Airline service standards were unquestionably superior during the regulated environment,” Von Kornfeld renders an interesting observation.

He does mention, however, that carrier safety was also considered a concern immediately prior to, and then after deregulation. “The major controversy focused on the allegation that safety and maintenance standards would be compromised due to the financial pressures brought about by an openly competitive environment,” Von Kornfeld says.

Pricing, as well as labor unions are important factors in the equation, and Von Kornfeld addresses their relevance in the deregulated environment.

“The primary rationalization for deregulation was to facilitate a more openly competitive environment. The increased competition was to ultimately have benefitted the consumer. Ironically, that’s not entirely the case, Von Kornfeld elaborates.

In addressing some of the negative aspects of airline deregulation, Von Kornfeld suggests that some sort of federal re-regulation may be in order.

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