The Airline Deregulation Act is a 1978 United States federal law that deregulated the airline industry in the United States, removing federal control over such areas as fares, routes, and market entry of new airlines. The act gradually phased out and disbanded the Civil Aeronautics Board (CAB), but the regulatory powers of the Federal Aviation Administration (FAA) over all aspects of aviation safety were not diminished.

Since 1938, the federal CAB had regulated all domestic interstate air transport routes as a public utility, setting fares, routes, and schedules. Airlines that flew only intrastate routes, however, were not regulated by the CAB but were regulated by the governments of the states in which they operated. One way that the CAB promoted air travel was generally attempting to hold fares down in the short-haul market, which would be subsidized by higher fares in the long-haul market. The CAB also had to ensure that the airlines had a reasonable rate of return.

The CAB had earned a reputation for bureaucratic complacency; airlines were subject to lengthy delays when they applied for new routes or fare changes, and were often not approved. For example, World Airways applied to begin a low-fare New York City–to–Los Angeles route in 1967; the CAB studied the request for over six years, only to dismiss it because the record was "stale". Continental Airlines began service between Denver and San Diego after eight years only because a United States Court of Appeals ordered the CAB to approve the application.

This rigid system encountered tremendous pressure in the 1970s. The 1973 oil crisis and stagflation radically changed the economic environment, as did technological advances such as the jumbo jet. Most major airlines, whose profits were virtually guaranteed, favored the rigid system, but passengers who were forced to pay escalating fares were against it and were joined by communities that subsidized air service at ever-higher rates. The United States Congress became concerned that air transport, in the long run, might follow the nation's railroads into trouble. The Penn Central Railroad had collapsed in 1970, which was at that time the largest bankruptcy in history; this resulted in a huge taxpayer-funded bailout and the creation of the government-owned corporations Conrail and Amtrak.

Leading economists had argued for several decades that the regulation led to inefficiency and higher costs. The Carter administration argued that the industry and its customers would benefit from new entrants, the abolishing of price regulation, and reduced control over routes and hub cities.

In 1970 and 1971, the Council of Economic Advisers in the Nixon administration, along with the Antitrust Division of the United States Department of Justice and other agencies, proposed legislation to diminish price collusion and entry barriers in rail and trucking transportation. While the initiative was in process in the Ford administration, the Senate Judiciary Committee, which had jurisdiction over antitrust law, began hearings on airline deregulation in 1975. Senator Edward "Ted" Kennedy took the lead in the hearings.

The committee was deemed a friendlier forum than what likely would have been the more appropriate venue, the Aviation Subcommittee of the Commerce Committee. The Ford administration supported the Judiciary Committee initiative.

In 1977, President Jimmy Carter appointed Alfred E. Kahn, a professor of economics at Cornell University, to be chair of the CAB. A concerted push for the legislation had developed from leading economists, leading think-tanks in Washington, a civil society coalition advocating the reform (patterned on a coalition earlier developed for the truck-and-rail-reform efforts), the head of the regulatory agency, Senate leadership, the Carter administration, and even some in the airline industry. The coalition swiftly gained legislative results in 1978.