Ongoing Government Failures in Air Transportation

Reforms to the United States air transportation market since the late 1970s have brought about important economic improvements, including lower fares for travelers, lower freight rates for shippers, and access to a more extensive range of destinations with greater frequency and quality of service. However, the Airlines Deregulations Act of 1978 is something of a misnomer because today many economic regulations over important aspect of air transportation remain. Some have been significantly broadened, including subsidies for certain local markets and regulations affecting consumer protection, safety, security, and the environment. While recent regulatory expansions may have been motivated by perceived market imperfections, some regulations are of doubtful social value, and some seem to have caused serious harm. At the same time, much of the air transportation infrastructure, including airports and the navigation system, remain largely government owned, despite mounting evidence from other countries that there are more efficient options.

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