Government Regulation of Airlines
In the world of travel, the airline industry is one of the most regulated businesses and probably has the most oversight compared with all other modes of public conveyance. The involvement of government covers national security, industry behaviour, aircraft integrity, traffic control and more.
Much of it has to do with safety, but in some cases the regulation is also to protect the existence of competition as well.
One of the most widely noticed forms of airline regulation is in the form of national security. Anybody who enters the United States sees it firsthand with customs and border control systems. However, even internally, security systems are in place to thwart and prevent terrorism before it occurs. This includes background checks of ticket buyers, searching luggage, X-ray and chemical detection of passengers and their belongings and air marshals to provide law enforcement while the plan is en route.
The Federal Aviation Administration (FAA) is heavily involved in regulating the construction, sale, maintenance and resale of commercial aircraft. As the government arm over aircraft use, the FAA is so integrated in the public use of aircraft, every spare part or replacement is tagged and has a manifest describing its source, use, history and disposition. The planes are tracked with FAA-required logs, with maintenance service and rebuilds required after so many flight hours. The FAA also performs regular inspections and reviews to make sure airline companies are staying consistent with safety and maintenance requirements. Finally, the FAA is the main agency involved with performing an investigation on a commercial aircraft crash.
The airline industry is not allowed to fly wherever it chooses. The FAA is involved in managing the traffic of aircraft around and in airports, and it also tracks airline movement nationwide and internationally. This intricate traffic control allows the FAA to immediately control specific areas or the entire grid to move traffic out of harm's way.
Mergers Receive Scrutiny
If two airline companies decide to combine their forces and merge, they will find their actions must first get the approval of the U.S. Department of Justice (USDOJ). The USDOJ provides the green light, allowing such business consolidations after reviewing the business impact on industry competition. As part of the antitrust oversight, the USDOJ can stop a merger if it determines a merger would create an unhealthy monopoly in a given airline market or region.
Many of the major commercial airlines are public companies listed on publicly traded markets. They fall under the purview of the U.S. Securities and Exchange Commission, the USDOJ and the FBI on matters involving civil business violations and criminal business activity. Each of these agencies can initiate investigations, to which a commercial airline company in the U.S. is required to respond.
As employers of thousands of personnel, airlines will also find their human resources operations under the jurisdiction of the Equal Employment Opportunity Commission (EEOC) and the U.S. Department of Labor.
It is not likely the airline industry will find itself free from government regulation anytime soon. In fact, in security matters, the airlines are likely to see more involvement in their business and movement of people. It is a marriage of necessity for the airline businesses. If airlines want to succeed in the U.S., they must follow the government rules that apply.
- Federal Reserve Bank of San Francisco: Competition and Regulation in the Airline Industry
- The Library of Economics and Liberty: Airline Deregulation
- Wired.com: The Case for Re-Regulation the Airline Industry
- The Wall Street Journal: Does the Airline Industry Need More Government Regulation?
- The Congressional Budget Office: Policies for the Deregulated Airline Industry