This dissertation examines the major causes of the unstable capital accumulation process in the trunk airline industry in the U.S. during the period 1946 to 1975. The study first traces the evolution of the multi-dimensional aspects of airline regulation, the role of existing airlines in shaping the regulation by the Civil Aeronautics Board to suit their interests best, the market relations among airlines, and the growth record of airline operations. What follows is an integrated examination of three factors considered to be primary sources of investment instability: aircraft technology, the airlines' market behavior, and their particular method of financing. The timing, size, and duration of each investment wave were influenced by the adoption of new aircraft technologies and their specific characteristics. Aircraft technologies that induced most of the industry's growth were essentially molded by the U.S. government which generally financed their development and rendered them commercially exploitable. The industry's rigid oligopolistic structure, as was fashioned by its regulator, precluded price competition entirely and elevated the competitive importance of the frequency of flights and of investment in modern flying equipment. Under competitive pressure, airlines usually attempted to acquire competitively superior aircraft simultaneously with little regard to their individual financial positions. The result was cumulative overcapacity, production inefficiencies, and recurring financial crises. Formal cartel agreements in the industry were effective in reducing waste. The airlines relied heavily on long-term debt and capital leases to finance investment. These funds were provided by a relatively few very large life insurance companies and commercial banks which were also holders of large blocks of airline stock. The extensive use of debt funds and the power of the large financial institutions involved alternatively accelerated and stifled capital formation in the industry. The dissertation concludes that the conditions that produced the boom-bust cycles in airline investment reduced the industry from a growth sector to a stagnant sector of the U.S. economy.
| Identifer | oai:union.ndltd.org:UMASS/oai:scholarworks.umass.edu:dissertations-7248 |
| Date | 01 January 1982 |
| Creators | PACHIS, DIMITRIOS SOTIRIOS |
| Publisher | ScholarWorks@UMass Amherst |
| Source Sets | University of Massachusetts, Amherst |
| Language | English |
| Detected Language | English |
| Type | text |
| Source | Doctoral Dissertations Available from Proquest |
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