ABSTRACT
The United States Congress initiated federal regulation of the US airline industry with the passage of the Civil Aeronautics Act of 1938. The Act established a five-person Civil Aeronautics Board charged with undertaking the economic regulation and development of the then infant domestic airline industry. This chapter examines the extent to which the US experience is translatable to the European industry. In the Memorandum, the Commission proposes a set of reform measures that would increase the entry and pricing flexibility of carriers in European markets. The key to improving the performance of the European air transportation system lies in relaxing entry controls for scheduled service. The benefits to consumers of improved service and lower prices should create political pressures to replicate the reforms between other member states. Diversion of traffic - especially pleasure traffic should increase the pressures on airlines serving other markets to agree to the spread of the reforms.
