The Jet Age (1958 - Today)

"I really don't know one plane from the other. To me they are all just marginal costs with wings."

-Alfred Kahn, airline economist



Hubs and Spokes

A "hub" is a central airport with flights paths radiating from it like spokes on a bicycle wheel. In a hub-and-spoke airline system, most flights connect through a few hub airports. How might a backup at one hub affect travelers all over the country?

Deregulation: A Watershed Event

In 1978, Congress passed a law allowing airlines to set their own fares and routes, an event that transformed the industry and the passenger experience.

Regulation by the federal government had enabled airlines to prosper, but it also kept fares high and prevented airlines from operating as efficiently as possible. Many thought the Civil Aeronautics Board, which regulated aviation, had outlived its usefulness.

Congressional investigators compared fares of regulated airlines flying between states with fares of unregulated airlines flying within states. They found that unregulated airlines charged far lower fares. Sweeping change was needed, and Congress took action.

Alfred Kahn

Cornell University economist Alfred E. Kahn was among the first to view the airline industry strictly as a business. He believed that breaking up the industry structure would create new airlines, increase competition, and lower fares. President Carter appointed him chairman of the Civil Aeronautics Board to lead the nation into airline deregulation.

 

The Airline Deregulation Act of 1978

Passed with bipartisan support, the Airline Deregulation Act phased out the Civil Aeronautics Board and immediately lifted restrictions on fares and access to routes. Airlines could now fly where they wanted and charge what the market would bear.

Established airlines rushed to gain or preserve access to the most lucrative routes. New airlines quickly formed. Fierce competition resulted and drove fares down. Passengers flocked to airports in record numbers.

Airlines Oppose Deregulation
Delta Air Transport Heritage Museum

Most airlines strongly opposed deregulation and encouraged their employees to lobby against its passage. Their fears of a destabilized industry were well founded.

Jimmy Carter
National Air and Space Museum Archives

President Jimmy Carter signed the Airline Deregulation Act into law on October 24, 1978, the first time in U.S. history that an industry was deregulated.

Delta Route Map
Delta Air Transport Heritage Museum

The Hub-and-Spoke System

Deregulation lifted restrictions on where airlines could fly. To increase their efficiency, airlines adopted the hub-and-spoke system-using a few major airports as central connecting points.

This strategy maximized aircraft use, increased passenger loads, and kept more aircraft flying. But it also increased airport and air traffic congestion and eliminated many convenient nonstop flights. And if one airline dominated a hub, the lack of competition often led to higher fares.
Delta Air Transport Heritage Museum