Airlines and the Role of Government in the 21st Century - Essay Example

As a matter of fact, the United States was amongst the pioneering countries of the Globe, with regard to deregulation of the airlines. In fact, in the year 1978, the Airline Deregulation Act came into force, in USA, thus paving the way for reduced governmental control over the Industry (Airlines). Subsequently, the European Union and several other zones also initiated steps aimed at this deregulation. Owing to this scenario of enhanced authority in the hands of the airlines, they attained a position where they could fix their routes, destinations and tariffs, etc, as per their choice. (1) The State of Affairs at the Start of the Twenty First Century The initial decade of the current century turned out to be nothing short of a commercial catastrophe for the airline sector.

The already prevalent crisis got further aggravated with the rapid rise in the cost of oil prices and the global economic recession, in the year 2008. In those circumstances, the airlines were left with no other choice but to initiate steps aimed at cost cutting, as well as charging more from the passengers for some services. Even after normalcy got restored on the global economic front, yet, the airlines are reluctant to discontinue the aforesaid measures, lest they could get impacted by the decline in demand. (2) Using all the circumstances discussed in the previous paragraph as their basis, sections of the economy opposing deregulation are arguing that it (deregulation) is a gross failure.

They maintain that the government should regain its full control over the airline industry, for its very own betterment. Here, the quarters of the economy going by this argument need to understand the fact that, not all the issues confronting the sector have resulted from deregulation. As a matter of fact, things such as the recent economic recession resulted not just from deregulation, but also from several other factors. (2) Airline Losses In the three decades following the deregulation, the losses incurred by the airline sector were to the tune of $60 billion.

In fact, a substantial chunk of the losses are attributable to the circumstances directly resulting from the terror attacks of September 2001. In face of such adverse situation, the government came to the rescue of the industry, both by providing cash and also coming out with loan guarantees. (3) The federal government is now vested with the major responsibility of running the extra mile in ensuring that the airline sector comes out of the crisis. For this purpose, the government is necessitated to initiate several measures, with not the least amongst them being discarding the outdated technology of air traffic control and adopting the sophisticated satellite-based technologies.

This would go a long way in making sure that consumption of fuel is drastically cut down. And it has to be noted that rapidly escalating fuel costs are amongst the chief causes of the loss that has been incurred by the sector. (4) Entry of Foreign Governments Since the recent past, several governments have been challenging the leadership of the US, in the sector of aeronautics. They (foreign governments), by working in close coordination with their respective players of the aircraft sector, are toiling in the realm of aeronautics technology.

Even though all this is not in accordance with the commercial interests of