Deregulation and Innovation in the Aviation Industry
Deregulation has made significant reforms to the aviation industry as it is now open to innovation. There was no road, no price or regulation of competition. It meant that fleet management had to adapt to ensure performance and customer satisfaction. Maintenance during the pre-deregulation era was predictable, and while traffic was on the increase, sufficient safety was provided by the Civil Aviation Board (CAB). Replacement of aircraft was smoother on technological grounds. Today, the purchase of airlines must be closely assessed for gains versus associated costs. The increase in oil prices meant that inefficiencies in the older aircraft had to be managed. New airlines had the capability to be flown by two pilots due to two engines compared to three and four-engine planes. Deregulation opened doors for such costs to be transferred to the clients through higher airfares, but with a supply of efficient aircrafts, customers had a variety of airlines to choose (NewMyer, 1990). With lower airfares, the industry quickly opted to pursue new routes, meant further expansion in the operations of the aviation sector.
The Innovation of the Hub and Spoke
The innovation of the hub and spoke meant that airlines could specialize through assembling flights in given hubs where flights could drop and pick customers through an interchange. Though the interchange was chaotic in the rush hours, it provided an opportunity for employment and high revenues for the airlines (NewMyer, 1990).
Challenges and Changes in the Industry
Reduction in costs meant that they had to dispose of older planes though with new technology labor costs were higher. Concerns were also raised as there was a departure from practices in the past relating to fly by wire changes that could pose a risk to the flying of aircrafts. An engineer would have given the advice to move slowly with the changes. However, it was inevitable if the cost of producing airlines was to be reduced.
NewMyer, D. (1990). The Impact of Deregulation on Airports: An International Perspective. The Journal Of Aviation/Aerospace Education And Research, 1(1). doi:10.15394/jaaer.1999.1010