By Dr. Nina Natoli
Fulltime Faculty, Transportation & Logistics at American Public University

Should the government keep inefficient airlines afloat? Warren Buffet once alluded that if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down. From its inception the airline industry grew through government support and regulation. At the time when the Civil Aeronautics Board (CAB) was established in 1940, the airline passenger industry ranked second in profitability to the federal airmail business. Larger airlines at the time wanted assurances that their passenger business would not be taken away from them by indiscriminate competition. CAB’s mission was to provide permanent operating franchises to the airlines and to establish regulatory pricing. Even after CAB introduced airfare regulations designed to keep the airline industry healthy, the greatest revenue continued to come from airmail contracts.