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October 24, 1978Primary source · 2 sourcesWell documented

The United States Deregulates Its Airline Industry

Congress ends 40 years of government-set fares and routes, betting that competition will do the job better

On the timeline · around October 24, 1978 · Modern AviationWar and the Jet AgeModern AviationThe United States Deregulates Its Airline Industry1965197019751980198519901995

Quick facts

Signed into law
October 24, 1978, by President Carter
Agency phased out
Civil Aeronautics Board, fully by December 31, 1984
Carter's stated goals
Fight inflation, expand low-priced air travel
Major carrier bankruptcies, 1978-2001
8 major airlines plus 100+ smaller carriers

What happened

President Jimmy Carter signed the Airline Deregulation Act into law on October 24, 1978, ending four decades of federal control over U.S. domestic airline fares, routes, and market entry that the Civil Aeronautics Board had exercised since 1938. Carter framed the law's purpose plainly at the signing: it would help fight inflation and ensure ordinary citizens the opportunity for low-priced air travel, arguing that competition had already brought lower fares, more passengers, and higher profits in early test markets. The Civil Aeronautics Board itself was gradually phased out and ceased all regulatory operations on December 31, 1984, though the FAA retained full authority over aviation safety throughout.

Why it matters

Deregulation reshaped American commercial aviation from a small, government-priced club into a mass-market industry built on price competition, hub-and-spoke route networks, and frequent-flier programs, but it also triggered decades of airline bankruptcies, since between 1978 and 2001 eight major carriers, including Eastern, Pan Am, and TWA, along with more than 100 smaller airlines, went bankrupt or were liquidated under the new competitive pressure.

How we know

President Carter's own remarks at the bill's signing are preserved in the official record maintained by the American Presidency Project at the University of California, Santa Barbara, and the legislative history and industry effects are documented by Airlines for America, the U.S. airline industry's own trade association.

Sources

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