Deregulation in the Australian Airline Industry
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The deregulation within the Australian Airline Industry and throughout the world in general has seen varying effects to the economy. A removal of regulations which inhibit or restrict certain types of business or economic activity is what is commonly conceded as deregulation. The Australian Airline Industry has noticed a share of problems and benefits throughout its continuing stage of deregulation after the regulated period, over ten years ago.
The implementation of deregulation of the industry by the government was designed to:
"Open the industry up to competition in order to foster: increased responsiveness by airlines to consider needs; a wider range of fares and types of services to provide enhanced travel opportunities; increased competition and pricing flexibility leading to greater economic efficiency in the industry; and a continuation of Australia's world renowned aviation safety record." (Queensland Tourist and Travel Corporation, 3; 1990)
The airline industry was originally regulated out of concern that carriers, left to their own devices, would compete so intensely that they would set fares too low to generate the profits needed to reinvest in new equipment and other capital. It was feared that this self-destructive behaviour would, in turn, lead to the degradation of safety and service, ultimately leading to either an erosion of service in some markets or dominance by one or two surviving carriers. The key concepts mentioned above were asserted to assure the aviation industry would provide greater opportunities to the flying population, travel agencies, tourist industries and the economy.
On a world wide basis, deregulation of the airline industry has demonstrated resounding and poorly judged results. When legislation was passed ending the government's role in setting prices and capacity in the industry, average fares dropped more than 50% (Internet 1), daily departures more than doubled and the number of people flying more than tripled. These outcomes proved to be an immaculate success for consumers...