Regulation of airlines in US

Regulation of airlines in US and Europe has been referred as a long term doom that tied the industry and blocked development for many years. According to Clifford and Clifford (2008, pp. 123-124), a comparison of US pre and post deregulation period denotes massive loss of opportunities for the country. It depicts how insensitive governance can derail a country’s progress in creating more revenue and better services to the people. The establishment of the Civil Aeronautic Board (CAB) in 1939 suppressed the industry until the passing of the Airline Deregulation Act in 1978.CAB became highly bureaucratic as it dictated the fares to be charged and the routes to be used by the airlines. As a result, only the recommended operation lines developed with great minimization of the total number of cities that were served by the airlines. The Board controlled the prices charged by the airlines for different destinations. This killed the overall self regulating system of the market forces to determine the overall prices of the services offered to the consumers. As a result, the people suffered exemplary high prices.Government Accountability Office indicated that the prices of passengers were about 9% higher in 1960s and 1970s compared to the period immediately after deregulation (Peterson, 2005, PP. 105-139). As a result, massive delays and low quality services shed off the consumers of the airline companies services. Besides, the government discouraged external investors by demanding partnership with the citizens and limiting their ownership to 25% of the total investment. Notably, this law was not eliminated in the deregulation act and keeps off international investors away from US.The current development in EU has largely been boosted by its softening stand especially to the investors from the Gulf. Emirates Airlines has vast investments in the EU aviation industry (Oum and Zhang, 1997, 309-315, Baird, 2006, pp. 195-214). In UK, the Civil Aviation Authority executed its mandate with strong orientation to political demands where the immediate leaders manipulated its operations to their advantage. Privatization is viewed as a major part of deregulation which took place in 1980s and 1990s. In the year 2001 the Commission for Aviation Regulation in Ireland was established and regulates the airport charges in the country.Though the government has indicated that the Commission is mainly responsible for security purposes, investors have cited it as a major stumbling block in their quest to merge and freely operate under the market forces (Baker, 2004, pp. 66-67). To add to that, Japanese airlines have suffered greatly due to strict governmental demands that requires licensing in entry and prices setting of their services. Besides, the Civil Aeronautic law also demands government approval before cooperation and/ or merger takes effect with other companies outside the country.Arguably, Japan has lagged behind and traditionally governs the airlines industry with the old Bermuda Agreement of 1946. Like in US during the regulation period, the country discourages mergers and acquisitions thereby suppressing the local and international progress. It is a major obstacle in the development of an international route network as companies shift to neighbouring much welcoming countries like Singapore, Malaysia and Philippine for their Far East terminals. This has been linked with the overall small market share of the passengers using airlines (Eldad, 2005, pp. 61-63, Susan, 2006, pp. 59-61).