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The Natur e of Civil Aviation and Airports 31

Airline Deregulation Act of 1978
The Airline Deregulation Act (Public Law 95-504) was passed by
Congress in October 1978. This legislation eliminated the statutory
authority for the economic regulation of the passenger airline indus-
try in the United States. It provided that the Civil Aeronautics Board
would be abolished in 1985. The legislation was intended to increase
competition in the passenger airline industry by phasing out federal
authority to exercise regulatory controls during the period of time
between 1978 and 1985. The principal provisions of this legislation:
1. Required the CAB to place maximum reliance on competition
in its regulation of interstate airline service, while continuing
to ensure the safety of air transportation; to maintain service
to small communities; and to prevent practices which were
deemed anticompetitive in nature.
2. Required CAB approval of airline acquisitions, consolida-
tions, mergers, purchases, and operating contracts; the bur-
den to prove that an action was anticompetitive in nature was
placed upon the party challenging that action.
3. Permitted carriers to change rates within a range of reason-
ableness from the standard industry fare without prior CAB
approval; the CAB was authorized to disallow a fare change
if it considered the change predatory.
4. Provided interstate carriers an exemption from state regula-
tion of rates and routes.
5. Required the CAB to authorize new routes and services that
were consistent with the public convenience and necessity.
6. Allowed carriers to be granted operating rights to any route
on which only one other carrier was providing service and on
which other airlines were authorized to provide service but
were not actually providing a minimum level of service. If
more than one airline was providing service on this route, the
CAB was required to determine if the granting of additional
route authority was consistent with the public convenience
and necessity before allowing additional carriers to service
the route. An airline not providing the specified minimum
level of service on a route (dormant authority) could begin
providing such service and retain its authority. Otherwise,
the CAB was required to revoke the unused authority.
7. Provided for an automatic market entry program, whereby
airlines could begin service on one additional route each year
during the period 1979 to 1981 without formal CAB approval.
Each carrier was also permitted to protect one of its existing
routes each year by declaring it as ineligible for automatic
market entry by another airline.