Airline Deregulation Research Articles

Can air traffic booms induce innovation and bridge regional innovation gaps?

AbstractThe key role of innovation in long-term economic growth is well-established, but it is unevenly distributed across regions. This paper examines how increased air passenger traffic fosters innovation and whether it reduces innovation disparities. Focusing on regional innovation in Indonesia, measured by patent activity, we utilize the exogenous airline deregulation in the early 2000s, which significantly boosted domestic air passenger traffic. Using a newly geocoded patent dataset for Indonesian municipalities from 1995 to 2016, we find that domestic air passenger traffic positively affects regional patenting. This result is robust across various samples and sensitivity tests. However, increased air passenger traffic alone may not suffice to reduce innovation disparities within the country.

U.S. Airline Customer Complaint Trends: A Decade-Long Analysis (2013-2022) Including COVID-19 Impacts

The Airline Deregulation Act of 1978 significantly reshaped the U.S. aviation industry, transitioning from government-controlled pricing and service standards to market-driven dynamics. This shift led to the rise of low-cost carriers, reduced service quality, and increased customer complaints. In response to fluctuating service standards, the Air Travel Consumer Report (ATCR) was introduced in 1987 to provide transparency in airline service quality. This study leverages ATCR data from 2013 to 2022 to analyze trends in customer complaints across major U.S. airlines. The primary objectives are identifying the major customer complaints and determining which airlines received the most complaints during the studied period including the COVID-19 pandemic era. Results indicate that flight problems, refunds, baggage issues, customer service, and reservations/ticketing/boarding are the top complaints, with refunds peaking during the COVID-19 pandemic due to travel restrictions. Airlines such as Frontier, Spirit, and United consistently received higher complaints, while Alaska, Delta, and SkyWest had fewer complaints. The study underscores the importance of service quality in fostering customer satisfaction and loyalty, suggesting that airlines should focus on reducing complaints in key areas to enhance service quality. The findings provide valuable insights for both airlines and consumers, highlighting areas for improvement and aiding consumers in making informed choices. This study also emphasizes the need for comprehensive service quality measures beyond consumer complaints to assess airline performance accurately.

Transportation Tourism – Generation Z Satisfaction Towards AIRQUAL on Low-Cost Airlines

The Airline Deregulation of Act 1978 created a new type of airline that is both cheap and affordable which is known as low-cost carriers (LCCs). Low Cost-Carriers (LCCs) are defined as airline that differentiates themselves in the market through reduced ticket prices. This paper investigate the relationship between Generation Z satisfaction on LCC airlines based on AIRQUAL dimensions. The paper also aims to determine what factor influences Generation Z satisfaction the most based on the AIRQUAL dimension. Data was collected via face-to-face intercept survey at arrival lounges of Kuala Lumpur International Airport Terminal 1 (KLIA T1) and Kuala Lumpur International Airport Terminal 2 (KLIA T2) of Low-Cost Airlines (LCCs) passengers, particularly Generation Z. In total, 227 valid responses were used for the final analysis. The study used Statistical Package for the Social Science (SPSS) to test validate the research model and hypothesis posted. The result revealed that Generation Z's satisfaction as a passenger is significantly affected by the AIRQUAL model. The study contributed to passenger satisfaction in the LCC sector is of the utmost importance for both airlines and the broader tourism industry, specifically concerning the service quality of LCCs by using the AIRQUAL framework. Furthermore, study of LCC passenger satisfaction yields valuable insights into the preferences and expectations of cost-conscious passengers. This information was significant for destinations and tourism businesses seeking to attract and cater to this market segment.

Delayed Flights and Delayed Rights: It is Time for the United States to Follow the European Union’s Lead and Enact More Regulations to Protect Airline Passengers

Since Congress passed the Airline Deregulation Act of 1978, travelers have benefitted from airline deregulation through discounted prices and greater access to air travel, but these benefits have largely been offset by the reality that many airline passengers are unsatisfied with the airline industry’s customer service, or lack thereof. This Comment argues that the United States should follow the European Union’s lead and, in accordance with Regulation EC 261, require airlines to compensate passengers when their flights are delayed or canceled. The concentrated aviation industry has created a market that does not adequately protect airline passengers, and the courts have not provided passengers with an adequate venue for relief. Enacting legislation similar to Regulation EC 261 would make airlines accountable, improve service at a marginally low cost, and generate a more uniform standard of airline passenger rights, creating more transparency and certainty for both airlines and passengers.

Recent Developments in Aviation Law

Recent Developments in Aviation Law addresses developments in aviation law from January 2022 through December 2022. This submission focuses on certain cases in the area of aviation law that are expected to have a significant impact upon, and ramifications for, the industry going forward such as: (1) the Federal Aviation Act and Federal Aviation Regulations; (2) the Air Carrier Access Act; (3) the General Aviation Revitalization Act; (4) the Airline Deregulation Act; (5) the Montreal and Warsaw Conventions; (6) the Federal Tort Claims Act; and (7) the Death on the High Seas Act. Finally, this submission also discusses recent developments relating to the Federal Aviation Administration’s regulations for unmanned aircraft, as well as the potential impact of recent developments in the application of the Feres Doctrine.

Deregulating Consumers from the Airline Industry—DOT’s Proposed Rule in Response to U.S. Airlines’ Refusal to Refund Unused Tickets During COVID-19

The COVID-19 pandemic has resulted in significant delays and cancellation of airline tickets without proper refunds to consumers by U.S. airlines. In response to an unprecedented number of consumer complaints, in August 2022, the Department of Transportation (Department or DOT) proposed new rules regarding airline ticket refunds and consumer protections.Does this rule go far enough? This article provides a summary of the events and policy changes leading up to the Airline Deregulation Act (ADA) of 1978 and challenges the scope of federal preemption over the field of airline regulation that has created a boon to air carriers while essentially eliminating consumers as a market influencer. A review of court opinions since the enactment of the ADA shows an ongoing struggle with the scope of preemption and tenuous carve-outs for private rights of action. The role and effectiveness of DOT is evaluated in light of airlines refusal to comply with DOT requirements to provide ticket refunds for cancelled flights during COVID. This article also suggests ways to increase airline accountability for compliance with airline refund policies and increase protection of consumer rights by empowering consumers to bring private actions against airlines.

Air-Rail Alliances in the Context of Liability and Environmental Protection

Since the deregulation of airlines in the 1970s and 80s the aviation industry has constantly tried to find new ways to engage with the increasingly competitive aviation market by expanding their outreach through strategic partnerships and global alliances. Over the past 10 years airlines have strengthened their partnerships with railway companies to offer more convenient connections for passengers to their hubs and link remote areas to their route network. These Air-Rail Alliances have helped airlines to stay competitive in the modern aviation market. This short paper will briefly examine two legal issues pertaining to Air-Rail Alliance namely whether an airline can be held liable in case of an accident during the train leg of the journey and how Air-Rail Alliances help airlines to meet their carbon emission reduction goals under the European Union Emissions Trading Scheme (EU ETS) and the ICAO Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Especially during the COVID-19 pandemic, Air-Rail Alliances proved to be a good vehicle for airlines to replace specific flights in their network. The paper will first explain basic terminology relating to the airline’s business before explaining the structure of Air-Rail Alliances in more detail. Afterwards, it will address the question as to whether an airline can be held liable in the case of an accident during the train leg of the journey. The paper will answer this question by arguing that airlines cannot be held liable under international aviation law but rather the train operator under the lex loci of the state in which the accident occurred. Finally, the paper will discuss the structure of both the EU ETS and CORSIA and argue that Air-Rail Alliances are a valuable tool for airlines to meet their CO2 reduction goals. It will be highlighted that both regimes are flexible and adaptive enough to take the unprecedented consequences of the COVID-19 pandemic into account and underline how the law can be adaptive in such a changing environment.

A systematic review of the literature on air transport networks (1973-2021)

This research provides a systematic literature review on air transportation. Three periods are analysed: 1973–1999 (120 papers), 2000–2019 (742 papers), and 2020–2021 (177 papers), with the period 2000–2019 being the focus. A computer-assisted thematic analysis was conducted using Reinert's method to quantify thematic classes and their prevalence statistically. The evolution of class predominance over time was also analysed. The results highlighted six major thematic classes in 2000–2019, with three reflecting methodologies (i.e., parameter estimation, time-based problems, and optimisation) and the remaining three characterising underlying applications (i.e., co-opetition, business models, and external stakeholder/social view). Classes found for 1973–1999 also discuss optimisation and co-opetition, with the remaining classes focusing on aviation developments in Europe and transportation systems in general. Classes found for 2020–2021 agreed largely to the period 2000–2019, albeit with more well-delineated classes on the COVID-19 pandemic and the connectivity and accessibility of air networks. A correlation of methodologies and applications (2000–2019) identified the ubiquitous use of regression analysis throughout applications and the underrepresentation of complex network analysis and economic modelling in applications associated with the business models and external stakeholder/social view classes. Temporal trends suggest a steady increase in discussions of the parameter estimation class and subclasses related to low-cost carriers in Europe, regional airports, and high-speed rail co-opetition, and a decrease in investigations of airline alliances, deregulation, and privatisation.

Remaining Human: How the Airline Deregulation Act Shields Commercial Air Carriers From Legal Liability for Mishandling Human Remains

The Airline Deregulation Act of 1978 (ADA) deregulated the domestic airline industry. Specifically, the ADA ended the dual administrative system, which allowed the states to regulate intrastate airfare and permitted the federal government’s Civil Aeronautics Board (CAB) to regulate interstate airfare. The Act also included a broad preemption clause to prevent the states from reimposing economic regulations on air travel. The preemption clause prohibits a “State . . . [from] enact[ing] or enforc[ing] any law, rule, regulation, standard, or other provision having the force and effect of law relating to rates, routes, or services of any air carrier.” The Supreme Court has interpreted the scope of the ADA’s preemption clause expansively and concluded that only state law claims with a “tenuous, remote, or peripheral” relationship to an airline’s services survive preemption. Yet, the Supreme Court has never defined the key word: Service. Today, federal circuit courts disagree on the definition of “service,” and a majority have adopted the Fifth Circuit’s definition articulated in Hodges v. Delta Airlines, Inc. Applying the Supreme Court’s expansive view of the ADA’s preemption clause, the Fifth Circuit defined the term “service” as all bargained-for air carrier services, including “ticketing, boarding procedures, provision of food and drink, and baggage handling, in addition to the transportation itself.” The Fifth Circuit’s definition preempts almost all conceivable state law claims despite the Supreme Court excepting claims with a “tenuous, remote, or peripheral” relationship to an airline’s services from preemption. Consequently, the aviation industry largely evades state law. This Comment argues that courts should interpret the ADA’s preemption clause more narrowly to allow more state law claims to survive preemption, particularly claims arising from an airline’s mishandling, delaying, or misplacing of a loved one’s remains. As the COVID-19 pandemic claims lives and frustrates air travel, a perfect storm threatens to mishandle, delay, or misplace a loved one’s remains. Grieving mothers, fathers, husbands, and wives are left without a legal remedy because the ADA shields the airline industry from liability concerning “baggage handling” and the “transportation itself.” Courts should interpret the ADA’s preemption clause more narrowly based on the ADA’s clear purpose, the plain meaning of the ADA’s text, stare decisis, and the law’s treatment of other entities that mishandle human remains.

Cabotage and Deregulatory Anomalies

The strangest airline route in America is between Pago Pago and the Manu’a Islands in American Samoa. It is the only regularly scheduled service by a non-U.S.-flagged airline between two points in the United States (or its territories) due to the lack of a U.S. carrier offering service to the territory’s domestic route. Under existing U.S. cabotage policies, states and U.S. territories are divested of all power to manage interstate air transportation to and from other U.S. airports as a matter of law. Specifically, federal law permits only U.S. carriers operating U.S.-registered aircraft to fly between U.S. states and territories. Consequently, governments like that of American Samoa have no authority to allow non-U.S. carriers to fly in and out of American Samoa to key connection points to the United States, such as Honolulu or Los Angeles. Standing alone, the absence of foreign carriers in any particular aviation market is unproblematic and even expected where purely “domestic” travel is involved. But, in American Samoa, the absence of foreign carriers means that competition and consumer choice are nonexistent. Meanwhile, presently, just one U.S.-flagged carrier—Hawaiian Airlines—connects American Samoa with any other part of the United States. In this monopolistic framework, few if any incentives exist for Hawaiian Airlines to provide more than the mini- mum acceptable level of service. And, in fact, in 2020, the Governor of American Samoa signed an Executive Order seemingly evicting Hawaiian Airlines from the territory while calling for permanent waiver of federal cabotage law—an action that the U.S. Department of Transportation (DOT) rejected as an authority not countenanced under the Airline Deregulation Act of 1978. This Article argues for a change or exemption in the current law. In so doing, this Article features the body of national aviation law as an unexpectedly useful area in which to gain insight into the flaws of imperial rule. With respect to American Samoa specifically, federal cabotage rules and laws deregulating the commercial airline industry displace territorial efforts to achieve autonomy and self-governance over matters of local concern and constitutional dimension, including jurisdiction (i.e., navigation), commerce and trade, and travel. Worse, national laws strip territorial leaders of the ability to better the welfare of their community without also meaningfully advancing U.S. objectives. Therefore, this Article argues that Congress should exempt American Samoa permanently from application of cabotage and deregulation laws and policies, a seemingly local issue that genuinely portends wholesale changes to longstanding international aviation law.

Four decades of airline productivity and efficiency studies: A review and bibliometric analysis

Airline productivity and efficiency have remained an area of tremendous interest among both academics and industry analysts since the Airline Deregulation Act of 1978 was enacted in the United States. This paper provides a bibliometric analysis of airline productivity and efficiency studies during the period from 1979 to 2020. The results show that the Journal of Air Transport Management, Transportation Research Part A, and Transportation Research Part E were the top three outlets preferred for publications in this area during the study period, and productive authors were likely to produce influential works. Research interest in airline productivity and efficiency has spread to encompass more diversified geographical regions over time, and new researchers from a broad range of fields continue to become interested in this field of research. Data envelopment analysis and stochastic frontier analysis are shown to be the most popular methods used by researchers, and studies are increasingly attempting to incorporate undesirable outputs, such as carbon emissions, flight delays and accidents, into the measurement and analysis of airline performance. The results from this study can provide guidance for future research issues and directions.

Does the nature of airport terminal service activities matter? Processing and non-processing service quality, passenger affective image and satisfaction

The surge in air transport demand and the increasingly competitive and volatile market dynamics due to airline deregulation are rapidly transforming airports’ character into multi-service firms and destinations. As a result, service performance measurement of significant systems and their consequent impact on airport users are crucial in creating better airport service design, operation and management for sustainable competitive advantage. The present study 1) assesses the applicability of the Airport Indicators of Passenger Experience (AIPEX) model on Shanghai Pudong International Airport (PVG), and 2) tests a theoretical model that explores the direct and indirect relationships among airport service quality, passenger affective image and satisfaction, as well as the moderating mechanism of passenger type (travel purpose) in these associations. The results indicate that, the AIPEX model fits the PVG context for airport service performance assessment. Also, the theoretical model suggests robust direct associations among processing/non-processing domains and passenger satisfaction, as well as the processing domain and passenger affective image, except non-processing domain and passenger affective image relation. Moreover, significant mediating and moderating effects of passenger affective image and travel purpose on the significant positive direct associations are found. Further, implications for theory and practice are discussed.

Out-of-Network Air Ambulance Bills: Prevalence, Magnitude, and Policy Solutions.

Policy Points Out‐of‐network air ambulance bills are a type of surprise medical bill and are driven by many of the same market failures behind other surprise medical bills, including patients’ inability to choose in‐network providers in an emergency or to avoid potential balance billing by out‐of‐network providers.The financial risk to consumers is high because more than three‐quarters of air ambulances are out‐of‐network and their prices are high and rising. Consumers facing out‐of‐network air ambulance bills have few legal protections owing to the Airline Deregulation Act's federal preemption of state laws.Any federal policies for surprise medical bills should also address surprise air ambulance bills and should incorporate substantive consumer protections—not just billing transparency—and correct the market distortions for air ambulances. ContextOut‐of‐network air ambulance bills are a growing problem for consumers. Because most air ambulance transports are out‐of‐network and prices are rising, patients are at risk of receiving large unexpected bills. This article estimates the prevalence and magnitude of privately insured persons’ out‐of‐network air ambulance bills, describes the legal barriers to curtailing surprise air ambulance bills, and proposes policies to protect consumers from out‐of‐network air ambulance bills.MethodsWe used the Health Care Cost Institute's 2014‐2017 data from three large national insurers to evaluate the share of air ambulance claims that are out‐of‐network and the prevalence and magnitude of potential surprise balance bills, focusing on rotary‐wing transports. We estimated the magnitude of potential balance bills for out‐of‐network air ambulance services by calculating the difference between the provider's billed charges and the insurer's out‐of‐network allowed amount, including the patient's cost‐sharing. For in‐network air ambulance transports, we calculated the average charges and allowed amounts, both in absolute magnitude and as a multiple of the rate that Medicare pays for the same service.FindingsWe found that less than one‐quarter of air ambulance transports of commercially insured patients were in‐network. Two‐in‐five transports resulted in a potential balance bill, averaging $19,851. In the latter years of our data, in‐network rates for transports by independent (non‐hospital‐based) carriers averaged $20,822, or 369% of the Medicare rate for the same service.ConclusionsBecause the states’ efforts to curtail air ambulance balance billing have been preempted by the Airline Deregulation Act, a federal solution is needed. Owing to the failure of market forces to discipline either prices or supply, out‐of‐network air ambulance rates should be benchmarked to a multiple of Medicare rates or, alternatively, air ambulance services could be delivered and financed through an approach that combines competitive bidding and public utility regulation.

What does Europe do about fair competition in international air transport? A critique of recent actions

The States’ perception of what constitutes fair competition in international air transport has evolved from a quid pro quo approach in the era of airline regulation to a laissez-faire approach in the era of airline de-regulation. However, no consensus has ever been reached as to, first, what constitutes fair competition in an industry whose market access is still contingent on bilateral air services agreements (ASAs), and, second, what the pre-requisites of a level playing field are. The commercial success of the Gulf airlines has obliged regulators and policymakers around the world to revisit this issue and demand compliance with global rules. The EU has responded by adopting Regulation (EU) 2019/712 on safeguarding fair competition, as well as by championing the inclusion of fair competition clauses in ASAs. The analysis examines the compatibility of unilateral action under the Regulation with mutually negotiated solutions under ASAs so as to assess the legitimacy and efficiency of the EU strategy in the area of fair competition in international air transport.

What States Can Do to Address Out-of-Network Air Ambulance Bills.

Out-of-network air ambulance bills are a pernicious and financially devastating type of surprise medical bill. Courts have broadly interpreted the Airline Deregulation Act to preempt most state attempts to regulate air ambulance billing abuses, so a federal solution is ultimately needed. However, in the absence of a federal fix, states have experimented with a variety of approaches that may survive preemption and provide some protections for their citizens.

FREQUENT FLIER PROGRAMS OF LOW COST AIRLINES THE WORLD AND TURKEY

ABSTRACT Airlines often use Frequent Flyer Programs (FFPs) as one of marketing tools. Traditional airlines had started to use FFPs after airline deregulation against low cost carriers in order to get competitive advantage. The main purposes of the FFPs are to provide extra services to passenger who fly very often and maintain the loyalty of passengers creating the main income for the airlines. FFPs helps traditional airlines a lot to get advantages in competition to the low-cost carriers (LCCs). Although traditional airlines started to use FFPs at first, with the on-going update of system, even if it is against the nature of LCCs, FFPs has begun to be used for LCCs as well for last two decades. In this study, try to examine the LCCs use FFPs effectively and the differences between the FFPs used from the LCCs in the World and Turkey. In this context, the best LCCs in 2017 selected by Skytrax and Turkish LCCs FFPs examined as a case study. Search results indicate that only one LCC don’t have FFP and The World and Turkish LCCs has similar FFPs. Keywords: Frequent flyer programs, low cost carriers, tourism, airline

Regulatory Review Commission + Regulatory Budget = a Diet for Better, More Effective Regulations

Excessive regulatory accumulation has long been a concern of policymakers, and over the past 40 years, many presidents and members of Congress have taken steps to address this issue. Every recent president beginning with Carter issued or reaffirmed executive orders that set requirements for regulatory agencies in an attempt to avoid poorly designed and excessive regulations. Similarly, Congress began taking steps to address overregulation with the Airline Deregulation Act of 1978, the Staggers Rail Act of 1980, and the Motor Carrier Act of 1980. Each of these attempts had a laudable goal, but none have had the effect of reducing and limiting the long-term accumulation of regulations. To reduce the burdens of regulations now and in the future, a proper regime must include both a drastic reduction of the regulatory bloat and a formal mechanism to limit the growth of the regulatory code. Together, these approaches would give Congress the information, incentives, and capacity to address existing costly regulations and regulatory accumulation more broadly, as well as improve future legislation and control the growth of new regulations. This policy brief describes the problems associated with regulatory accumulation, then briefly describes these two approaches and how Congress can use them together to take more control over the regulatory process and improve both legislation and regulation.

Airline Code‐Sharing and Capacity Utilization: Evidence from the US Airline Industry

AbstractFollowing the passage of the Airline Deregulation Act in 1978, the degree of competition among air carriers, increased significantly. Airlines resorted to many ways—including code‐sharing—in response to competitive pressures. This article is a retrospective study on the load factor effects of the largest domestic codeshare partnership established in 2003—between Delta, Northwest, and Continental airlines. After controlling for aircraft configuration, carrier, and market characteristics, we find evidence that code‐sharing improves the partners’ load factors relative to other carriers in all markets combined. However, we find statistically significant negative (positive) codeshare effects on load factor in markets where the codeshare partners competed (did not compete) prior to code‐sharing.

Privatization and Deregulation of the Airline Industry

The aviation industry doubles market size every 15 years. This growth is partly determined by changes in government regulations. The present chapter describes how the privatization and deregulation of airline markets has contributed to this development. First, we describe the historic development of the airlines’ regulatory environments and ownerships across countries, regions, and continents. Areas including the United States, the European Union, China, India, the countries of Africa and the South East Asian Nations serve as the representative markets and are discussed in more detail. It is shown that deregulation in the air transport market has become a mainstreamdevelopment, and that deregulation has changed aviation markets in many positive ways. Deregulation generally led to stronger competition, reduced fares, increased flight frequencies, more connections, and increased passenger numbers. But deregulation is still far from completion, which illustrates the potential for further improvements of aviation markets. Second, we briefly describe the airlines’ privatization development around the world. Many studies showed that public airline ownership can be associated with major financial losses, while private ownership can help to avoid such losses by improving efficiency and increasing revenues. However, a large share of today’s airlines is still completely or partly government owned.

Comment on Reuel Schiller: The Curious Origins of Airline Deregulation: Economic Deregulation and the American Left

Air travel is unpleasant for many reasons, particularly in the post-9/11 age. Yet, blame for the cramped accommodations, bag fees, and lack of direct flights has to be assigned in part to the deregulation of the airline industry in the late 1970s. Airline deregulation and its consequences symbolize the ways in which neoliberal ideas and practices have come to shape economic policies as well as the daily lives of ordinary Americans.