History of the Air Cargo Industry After Deregulation Act of 1977

History of the Air Cargo Industry After Deregulation Act of 1977

Introduction

Federal Express Corporation (FedEx) is one of the major cargo airlines in the US and the world’s largest cargo airline based on the fleet size and freight tons flown. The airline was founded in 1971 and officially started its operations on April 17, 1973. The company celebrated its 49-year anniversary in April 2022. The airline has its headquarters in Memphis, Tennessee, and serves more than 375 destinations across 220 countries on all continents (FedEx, 2012). It is the largest express cargo carrier in the world, with 12 air hubs in its worldwide network. Its super hub is located in Memphis, and a national hub is in Indianapolis. Major regional hubs are located in Anchorage, Fort Worth–Alliance, Greensboro, Miami, Newark, Oakland, and Ontario (CA). The company’s current total fleet number is 688, which contains aircraft such as Airbus A300-600RF, Boeing 757-200SF, Boeing 767-300F, Boeing 777F, McDonnell Douglas MD-10-30F, and McDonnell Douglas MD-11F. The company also contracts other aircraft, such as the ATR series, to supplement its fleet.

Advantages after the Deregulation Act of 1977 for FedEx

The Deregulation Act of 1977 had several advantages for FedEx and other cargo carriers. The deregulation sought to remove economic barriers in the air cargo industry. One of the most significant advantages as a result of the Deregulation Act of 1977 was that it allowed FedEx to upgrade from a fleet of small jets to a fleet of large aeroplanes that carried larger amounts of cargo more efficiently, as Jill (2019) notes. Further, before the Deregulation Act of 1977, FedEx could not ship cargo overnight over point-to-point routes under passenger air flight regulations. After the act, FedEx and other carriers could use larger aircraft for overnight shipping through any route, with the prices being determined by the market (Button & Christensen, 2014). The new regulation also enabled FedEx and other cargo airlines to increase their reliability since they allowed for a multitude of delivery speeds, time, and a combination of methods. The act also eliminated the unpredictability in shipping since the amount of space left after passenger luggage was loaded in the aircraft’s belly determined cargo shipping.

Disadvantages and/or Competitive pressures after the Deregulation Act of 1977 for FedEx

However, the Deregulation Act of 1977 also posed some downsides to FedEx and other cargo carriers. The deregulation allowed for open operations in the cargo industry, which increased the competition for FedEx. This was due to the decreased prices of tickets as well as the free market operations and freedom of carriers to operate on any route (Kim, 2016). Additionally, the lowered rates benefitted the travellers at the disadvantage of cargo airlines. The freedom in operations also caused congestion in busy airports, which disadvantaged large airlines more than the smaller airlines. This also led to increased landing fees by some airport planners to keep out smaller aircraft. The congested airspace also made airlines more vulnerable to catastrophes.

Conclusion

Conclusively, the environment posts the deregulation act allowed for several innovations that would not be possible under the initial Civil Aeronautics Board (CAB) and Interstate Commerce Commission (ICC) regulatory systems. Generally, the major advantages of the Deregulation Act of 1977 for both FedEx and other cargo companies can be summarized as deregulation of the air cargo industry, freedom for cargo carriers to operate on any domestic route, and allowing cargo air carriers to use larger aircraft. On the other hand, it led to increased competition, lowered rates, and increased risks.

References

Button, K., & Christensen, D. (2014). Unleashing Innovation: The Deregulation of Air Cargo Transportation retrieved from https://www.mercatus.org/publications/regulation/unleashing-innovation-deregulation-air-cargo-transportation#:~:text=The%20deregulation%20of%20passenger%20services,prices%20determined%20by%20the%20market.

FedEx. (2012). “FedEx Timeline | About FedEx”. FedEx. Archived from the original on February 12, 2012. Retrieved from. https://web.archive.org/web/20120212192329/http://about.fedex.designcdt.com/our_company/company_information/fedex_history/fedex_timeline#1980-1989

Jill, E. F. (2019). How Do Corporations Play Politics?: The FedEx Story, 58 Vanderbilt Law Review 1495. Available at: https://scholarship.law.vanderbilt.edu/vlr/vol58/iss5/2

Kim, D. (2016). The Effects of Airline Deregulation: A Comparative Analysis. The Journal of Business Economics and Environmental Studies, 6 (3), 5–10. https://doi.org/10.13106/EAJBM.2016.VOL6.NO3.5

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Research the Internet for History of the Air Cargo Industry after the Deregulation Act of 1977. The act deregulated the air cargo industry, gave cargo carriers the freedom to operate on any domestic route, increased competition, lowered rates, and allowed cargo air carriers to use larger aircraft.

History of the Air Cargo Industry After Deregulation Act of 1977

Pick one cargo airline to research. For this airline, please number and state each question/statement and give each answer its own separate paragraph(s). Review the rubric for detailed grading criteria.

1. Introduction: Name of the cargo carrier airline, brief description of the cargo airline, specific start date, route structure, and aircraft.
2. Describe the specific advantages after the Deregulation Act of 1977 for this specific airline.
3. Describe the disadvantages and/or competitive pressures after the Deregulation Act of 1977 for this specific airline.
4. Conclusion

Your report should include:

-A cover page
–Cover page includes your name, date, Course #, and Module Assignment #, Title
-Number and state each question/statement and give each answer its own separate paragraph(s)
-500 word minimum, not including references or the cover page
–Citations and references formatted in current APA style
-Observe written assignment formatting requirements: Times New Roman font, 12-pt font size, double-spaced text, with numbered pages.
-The paper must be grammatically sound and free of spelling errors. See the Resources area for helpful writing skills websites.
-A reference page at the end of the report
–A minimum of 3 references formatted to APA style requirements
–Two references must be scholarly, peer-reviewed, and from reputable sources.
–One textbook or Internet reference is acceptable
-If using a website as a reference source, use quality material. For guidance, see Source Reliability.