American airline industry has grown dramatically since the end of World War II. A few words about airline industry history. In 1945 the major airlines flew 3.3 billion revenue passenger miles (RPMs). By the mid 1970s, when deregulation was beginning to develop, the major carriers flew 130 billion RPMs. By 1988, after a decade of deregulation, the number of domestic RPMs had reached 330 billion.
The United States is the largest single market in the world, accounting for 33 per cent of scheduled RPMs (41 per cent of total scheduled passengers) in 1996. The most significant change in the history of the industry came in 1976 when the Civil Aeronautics Board (CAB) asked Congress to dismantle the economic regulatory system and allow the airlines to operate under market forces. This changed the face of American airline industry. Congress passed the Airline Deregulation Act in 1978, easing the entry of new companies into the business and giving them freedom to set their own fares and fly whatever domestic routes they chose.
Deregulation of American airline industry was followed quickly by new entrants, lower fares and the opening of new routes and services to scores of cities. The growth in air traffic brought on by deregulation's first two years ended in 1981 when the country's professional air traffic controllers went on strike. Traffic surged again after 1981, adding 20 million new passengers a year in the post strike period, reaching a record 466 million passengers in 1990.
In 1989 events began that severely damaged the economic foundations of the industry. The Gulf crisis and economic recession caused the airlines to lose billions of dollars. American airline industry experienced the first drop in passenger numbers in a decade, and by the end of the three-year period 1989-1992 had lost about US$10 billion - more than had been made since its inception. Great airline names like Pan American and Eastern disappeared, while others, such as TWA and Continental Airlines, sought shelter from bankruptcy by going into Chapter 11.
Today the domestic industry in the US is a low cost, low fare environment. Most of the major airlines have undergone cost restructuring, with United Airlines obtaining employee concessions in exchange for equity ownership. In 1993 President Clinton appointed the National Commission to ensure a strong competitive industry. Its recommendations seek to establish aviation as an efficient, technologically superior industry with financial strength and access to global markets.
Autumn 1996 saw the UK and US Governments hold bilateral talks with the intention of negotiating an 'Open Skies' arrangement between the two countries. The result of these talks is eagerly awaited by airlines on both sides of the Atlantic.
The last few years have seen the proliferation of airline alliances as the so called 'global carriers' of the future are created. North American carriers have been very much at the forefront of this activity, and today much of the world aviation market is shared between several large global alliances, including KLM/NorthWest, Atlantic Excellence alliance, STAR, and the British Airways / American Airlines alliance which also includes Canadian Airlines and Qantas. The latter still awaits regulatory approval on both sides of the Atlantic.