Airline Deregulation

Travel has been always a great motivator for humanity, some people work hard their entire lives just to save enough to break a glimpse at what this beautiful planet has to offer. Now who could help these people get from point A to point B, well it’s going to be airlines of course. Airline companies offer travel across the nation or globe via aircraft, therefore closing the distance gap that was much bigger in the last 100 years or so. From the foundation of aviation in the early 1900’s to the current state of it, there has always been some sort of aviation company providing transport, while it may not always has been people, it still provided transportation. Northwest Airlines was one of those airlines that started at the very beginning of

Although that did not last forever as the constant price increases on passenger and cargo fairs created a lot of discontent between the tax-payer and the airlines, considering the subsidies given to the airlines were funded by the American tax dollar. To solve the rather large amount of disgruntlement, the United States Government enacted the Airline Deregulation in 1978, and it wreaked havoc upon the airline industry and all of its participants, Northwest Airlines included. The airline was doing rather well until the deregulation where each airline became a part of a cut throat world, giving all the participants rather two rough options, which if were not followed created a certain doom for a particular company. Those two options being: (1) staying extremely flexible and constantly adjusting to the market or (2) creating strong alliances with other carriers that provided a safety net. Northwest Airlines choose to seek safety in numbers by finding a partner to initiate a merger with in 1986 (Moylan, 2008). That partner was Republic Airlines, another Twin Cities carrier, when the airlines finally agreed on a contract it was the biggest airline merger in history at the time. The merger was extensively difficult for both companies as a multitude of issues were constantly on the horizon, spanning from the employee strikes with unions behind their backs to the numerous operations mistakes (late flights, lost luggage). In addition there was a catastrophic accident when a MD-80 crashed on take-off, resulting in 156 casualties (Moylan, 2008). The newly merged company now named Northwest Airlines (the merger got rid of “orient”) was dealing with a lot of financial and social troubles, and sought help from the government. The State of Minnesota helped the company with a $761 million