Unscrambling the Eggs: Eastern Air Lines, Delta Air Lines, and the Deregulated Era Open Access

van der Horst, Benjamin (2009)

Permanent URL: https://etd.library.emory.edu/concern/etds/rb68xc02n?locale=en
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Abstract

This thesis examines two airlines during the first era (1978-1991) of airline deregulation. Before explaining the decisions of Eastern Air Lines and Delta Air Lines during this period and how these decisions led to Eastern's demise and Delta's success, a brief history of airline regulation and of each airline is given. A brief political history of how airline deregulation made it through Congress also precedes the chapters on each airline during the deregulated era.

I contend that four big decisions made by Eastern Air Lines in this period explain why the airline went from being the largest American airline in terms of passengers carried at the beginning of the deregulated era to a failed airline just over ten years later. These decisions are: 1) the purchase by Eastern of Braniff's South American Routes 2) Frank Borman's decision in 1983 to capitulate to Eastern's mechanics and give massive raises 3) the decision to sell Eastern to Frank Lorenzo in 1986 and 4) Lorenzo's decision to break the mechanics' union at Eastern. When put together, these four decisions tell the sad tale of Eastern Air Lines.

Likewise, I contend that four decisions made by Delta Air Lines in this same period explain why the airline went from being a mainly regional carrier at the beginning of deregulation to one of the three main American airlines by the end of this first era of airline deregulation. These decisions are: 1) continuing the Delta Spirit 2) building up new hubs 3) acquiring Western Airlines and 4) purchasing many assets from Pan Am. While Delta's story is not as interesting as Eastern's, it provides a useful foil for the chaotic decade Eastern faced. When the stories of these two airlines are put together, we see that the deregulated era forced airlines to make decisions that either they could not or did not have to make when regulated that determined the fate of each airline.

Table of Contents



Introduction.................................................................................................1

Chapter One: The Airlines Under Regulation........................................................8

Chapter Two: The Eggs are Scrambled: How the Industry Became Deregulated.......28

Chapter Three: Airlines in the Deregulated Era..................................................43

Chapter Four: Eastern and Deregulation..........................................................52

Chapter Five: Delta and Deregulation..............................................................91

Conclusion................................................................................................104

Bibliography..............................................................................................108

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