Airline Case

Events

Contract Airmail Act: Private Airlines Deliver Mail

1925 - 1929

McNary-Waters Act: Unethical Subsidies to the Big 3

1930 - 1933

Greatly subsidized the big 3

Airmail Act: Strict Bidding for Routes Delta and Cont Enter

1934 - 1937

Civil Aeronautics Act: Regulate Fare Rates and Earnings 13 Carriers

1938 - 1954

Jet Invented

1955

Fuel Costs Rose 222%

1969 - 1978

Airline Deregulation Act: Free to Compete on Price, Entry, Exit

1978 - 1995

Deregulation Act: Abolish CAB

1985

Industry Performance

22 low cost entrants challenged incumbents

1978 - 1980

Fuel Crisis

1979

Recession

1980 - 1985

Air Traffic Controllers' Strike

1981

Route Preferences

CAB and Delta Deal gives Delta Spokes to Atlanta

1940

Charlotte, NC leases all gates to Piedmont for 25 years

1981 - 2006

Merger Wave: TWA control 80% of St. Louis daily departures

1986 - 1987

Labor Policies

Bankruptcy Tactic to Counter Unionization

1982 - 1983

AA developed 2 tier wage structure

1983

Average labor costs had fallen to 35% of operating costs from 40%

1988

Asset Management

Stronger Trunk Carriers begin to Retire Aircraft

1980 - 1986

Aircraft makers flooded with orders, backlog 3-7 years

1986

Marketing Innovations

Computer Reservation Systems

1953

Low Fare Discounts

1976 - 1980

Across the board unrestricted low fares

1980

Frequent Flyer Programs

1981

Fare Wars

1982 - 1984

Tiered Fares

1987 - 1988

Industry Performance 1989-1994

Most Profitable Airline Period in History

1987 - 1989

Top 4 Airlines become buyout targets

1989

United and British Airways join

1989

8 Airlines Survive Fare Wars and Consolidation

1989

Industry Downturn: Persian Gulf War and LBOs

1990

Foreigners could hold 49% in Domestic Airlines

1991

Clinton Admin Commission Solutions

1993

Southwest Copycats Emerge

1993 - 1994