The Airline Deregulation Act of 1978 caused one of the most significant shifts in the aviation history of the United States. While some implications were immediately apparent, other consequences were noted later on the line. Several airlines struggled to cope with the changes in the market and eventually disappeared. Today, Delta Air Lines stands tall as one of the big four carriers in the country. However, it felt the effects of the new law along the way.
The sector is changing
The policy ultimately removed control of the federal government over many important factors within U.S. aviation. Therefore, there was an important transition for stakeholders to address.
Previously, the Civil Aeronautics Board (CAB) regulated domestic routes. The group set up most routes, schedules and even fares. Now revised statements gave Airlines greater freedom and helped them gain control over their services.
Furthermore, there was a critical change that brought deregulation that made it easier for startups to rise within the market. Newcomers now had the platform to develop, and existing outfits had the opportunity to enter into new segments. Officials were also worried about increasing competition and preventing carriers from raising prices while minimizing operations.
It is well documented that the likes of Braniff International Airways, Capitol Air, the original Frontier Airlines, Pam American, and Eastern Air Lines all went bankrupt in the decades that followed the action. Even though several of these carriers also struggled with several other issues, there was an increase in pressure with deregulation, and it was difficult for many veterans to handle the changes.
Most notably, airlines began to limit the status quo. Meanwhile, some experienced players now beat their competitors.
With with challenges
Delta is one of the legacy bearers that managed to survive the challenges that deregulation brought. While several of its competitors have fallen by the wayside, the Atlanta-based operator had remained and stood the test of time. However, it was not all smooth sailing for the company after the introduction of the deed.
In the mid-1980s, Delta was the fifth largest airline in the country. During this period, the New York Times highlighted how deregulation tightened competition around the company. Delta was a stronghold on the east side of the US, but it did not have such a grip on the nation.
The carriers that created the most opportunities following the change in the law continued to carry more passengers throughout the day. Moreover, they expanded state by state. Meanwhile, Delta faced problems with labor costs. Agreements within airlines for airlines were at the forefront of the aviation industry after deregulation.
Delta had one of the highest labor costs on the market, and it represented the first major disagreement with its employees since its inception. Along with this, his intelligent but cautious approach when it came to expansion was becoming obsolete as its competitors grew rapidly.
Addressing issues
In an effort to keep up with the declining rates across the sector, Delta turned to the innovative technology of the time. It consulted Control Data Corporation to use computer software to predict demand and deliver the optimal mix of full price and bargain rates for the 86 million seats it delivers per year.
The airline also began trying to target new hubs in Dallas and Cincinnati to increase revenue losses at Atlanta due to increased competition in Georgia. In addition, it launched marketing partnerships with such as Japan Airlines and Western Airlines to garner new customers.
The relationship with Western was taken a step further in 1986 when Delta merged with the California outfit. Speculation about the merger of the airline was widespread months before the announcement, but it was not clear with whom the deal would be.
Subsequently, in 1987, Western’s branding was no longer visible, and workers across the two carriers worked together. In addition, Delta’s freighter was covered on all of the Los Angeles – based carrier’s aircraft.
As a result of the merger, LAX became a useful gateway for Delta for flights departing from the Pacific coast. Along with this, Western’s Salt Lake City hub became a major asset.
Take it a step further
Delta now gained confidence to expand into the new era. Some worries began to subside, and it was on its way to breaking further ground as the 1990s approached.
Meanwhile, Pan Am was on a downward spiral at this time. In addition to several factors across the board, deregulation was not so friendly to the iconic carrier. In 1991, Delta won a bid to acquire some of the airline’s key assets.
The deal covered the company’s transatlantic operations. It also included the Pan Am Shuttle, which often offered flights in between Washington, DC, and New York. This acquisition positioned Delta as the third largest carrier in the US, and it also became a truly international player. Notably, Pan Am was no longer operational by the end of that year, and Delta would survive another former competitor.
Overall, deregulation has had a long lasting impact on American aviation. The effects are still clear today. Even though Delta was faced with challenges, it managed to adapt and is still one of the leading carriers in the country. However, the bill has allowed other operators to stand up, such as Southwest Airlines and JetBlue, and give new rivals to the carrier in place of its previous antagonisms.
What are your thoughts on the impact that deregulation had on Delta Air Lines? What have you been doing since the company’s advancement? Let us know what you think about the process in the comments section.
