The airline industry is one of the most heavily
regulated and subsidized industries in the country. In 1925, began in subsidy with the Kelly Act
that allowed the post office to begin paying private airlines to transport air mail. Now in 1930, the Air Mail Act was passed,
allowing the, uh, postmaster general t- broad authority for reforming the way that air mail,
uh, was paid for. So the postmaster general exceeded his authority
in convening many of the airlines and basically deciding who was going to survive, who would
fly what routes, and often, uh, not taking the cheapest bids in what became known as
the Spoils Conference, in what was then a scandal. When this came to light, all of the contracts
were voided, and FDR went to the military and asked them if they’d be willing to fly
the mail. Of course, they said yes. Unfortunately, they weren’t familiar with
the terrain, uh, and there were a series of airline accidents in the 1930s with the Air
Force. And so it was eventually turned back over
to the US airlines. In the late 1930s, the Civil Aeronautics Administration,
uh, which was the original regulator of the airlines, they carved off some of the functions
into the FAA, renamed it the Civil Aeronautics Board, and that was the primary regulator
of the airlines through the late 1970s. The Civil Aeronautics Board saw its mission
as, uh, ensuring the profitability of the airline industry. We usually think about regulation as being
intended to protect the consumer, but there the Civil Aeronautics Board, uh, wanted to
avoid what they called “ruinous competition.” So they decided, what airlines would be allowed
to fly which routes and the prices that were allowed to be charged. And there are subsidies for the airlines today. For instance, recently many of the major airlines
have been through bankruptcy, pensions were moved off of their, of their balance sheets
onto the federal Pension Benefit Guaranty Corporation. Airlines receive fuel tax subsidies. And airports aren’t paid entirely by ticket
prices. They’re paid for by localities. When a locality wants a new flight, they’ll
often offer guaranteed revenue or subsidies from the community to the airline in exchange
for those. Uh, so there’s some limitations in law, on
what an airline can do with its subsidies. They can’t offer pricing that is too low,
uh, but beyond that, the law had very little to say in this regard. Under the Airline Deregulation Act, there’s
really a uniform set of regulation of air travel across the US. Individual states aren’t able to regulate
it, and consumers aren’t able to go to state court with state law-based claims against
airlines. So individuals have rights against the airlines. Those are generally defined in federal law. For instance, if you have a, uh, disability
and you want to be accommodated, you have the Federal Air Carrier Access Act. Meanwhile, the airlines have a dedicated agency
in the Department of Transportation that regulates them and sets standards for their business,
and is the venue through which consumers can complain. Individual rights are generally determined
at the federal level within aviation, uh, rather than at the state level. So does purchasing a ticket guarantee you a seat on the flight? Since virtually the beginning of commercial aviation in the US,
airlines have sold more tickets on many flights than they have seats. And that’s because they know that not everybody
is going to make it to a given flight. However, you’re almost virtually certain to
be able to have a seat on the flight for which you buy a ticket. That’s because airlines
are pretty darn reliable, even though airlines do overbook, um, it’s very rare that they
turn people away that have a ticket for that flight. In April 1972, Ralph Nader booked a flight
on Allegheny Airlines from Washington, DC to Hartford, Connecticut. Allegheny Airlines booked 107 passengers for
100 seats. And what they had said to him was, “You know,
look, we’ll give you an alternate flight. We’ll get you there connecting in Philadelphia. And by the way, you have ten minutes to connect.” He didn’t do that. He took a flight to Boston instead. He had a staffer pick him up, and then he
went and sued. And it made it to the Supreme Court. And what the Supreme Court said was, ultimately
that there was a private right of action to sue an airline for overbooking, because even
back then it was so rare. What governs your relationship to airline
is the airline’s contract of carriage. And that’s going to lay out the airline’s responsibilities,
which is, generally speaking, to transport you from the city that you’re beginning to your
destination city. They’re not obligated to provide you that
transportation on the specific flights that they’ve sold you a schedule for. They’re going to provide you transportation
in a reasonable period of time around the schedule, uh, but not necessarily on those
flights. So for instance, if weather causes a flight
to cancel, they can put you on another flight, maybe it’s a nonstop, maybe it connects in
a different city. You don’t have a right to connect in the city
that you’d originally schedule to connect in. If they’re involuntarily denied boarding,
consumers are entitled to compensation under Department of Transportation rules. They’re entitled to compensation based on
the length of time that it takes them to get them to their final destination, but up to
four times the ticket cost, or $1,350.

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5 thoughts on “Airline Law and Regulation: A Brief History [POLICYbrief]”

  1. the people best stop fllying they have ways to take down plains with a touch of a key on the computer dont fly save your self from the evil people like the Clintons and all the scum on earth.

  2. If I buy/pay for a seat, why can't it remain empty if I don't show up? I paid for it. It's my seat. I don't get a refund ??

  3. here is our regulation regarding air transport liability : https://www.pojokasuransi.com/air-transport-liability-in-indonesia/

  4. Early in President Trump's term he announced hed be privatizing US air traffic control…a frankly terrible idea. Glad he apparently changed his mind

  5. Pan Am actually still exists as a small freight rail carrier which runs from Massachusetts to Connecticut and covers other northeast area routes too heh

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