2. THE PETROLEUM CRISIS AND DEREGULATION

The petroleum crisis in the early 70s and in 1978 disasterously slowed the world economy and the United States went into a recession. This slump in the aviation industry gave momentum to the implementation of deregulation and increased competition. Deregulation came into being in 1978 under the Carter Administration.
Deregulation simplified the establishment of new airline companies and free latitude to establish route structures and define fares. As a result, e3(CeSSive and unnecessary competition, and fare war broke out in airline industry. This caused revenue of airlines to drop drastically and many airlines, including some majors, lost money in the 1980s.
Unreasonable restructuring of the industry was an instrumental policy used to try to overcome lost revenue. Airlines froze or reduced pay, layed off employees, rehired or newly hired workers under a two tier wage system, hired part-timers and used every means possible to reduce personnel costs, pushing the burden on the workers.
Safety was undermined by reductions in maintenance, flight crew training and other reasonable expenses resulting in a number of aircraft accidents. ln 1985 the FAA conducted a safety ezamination resulting in Pan American being fined $1,950,000, Eastern $950,000 and American $1,500,000, while Peoples'Ezpress had a number of flight crewmen suspended because they were not given adequate training.
Aircraft manufacturers, like the airlines, also suffered from the recession following the oil shock. It was a life or death situation when aircraft requiring astronomical development investments could not find sales outlets.
The B-767, having been ordered by several airlines as a three man aircraft with the traditional flight engineer's panel, had to be redesigned into a two man configuration airplane so that it could compete with the A-310 already advertising itself as a two man aircraft.
This clearly indicates the influence of the policies to reduce costs and personnel had on the determination of cockpit crew complement. The first four B-767s were built with the traditional flight engineers panel, with the third aircraft doing most of the flight testing, but the fifth aircraft in which the workload tests were conducted was constructed in the two man configuration. The B-767 attained its airworthiness certification as a two man aircraft in 1982.

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