Final answer:
The events of 9/11 highlighted the need for regulation in the transportation industry, due to security flaws and the financial burden on private companies implementing security measures. The aftermath saw increased federal regulatory control to enhance national security, such as the creation of the Department of Homeland Security, and a shift in focus from the previous deregulation trend.
Step-by-step explanation:
The events of 9/11 demonstrated a critical need for regulation within the transportation industry, particularly in the areas of security and safety. These events highlighted serious security flaws, such as the lack of regulation for flight schools and the transportation of hazardous materials. The need for regulation is underscored by the costly and oftentimes ineffective security measures private companies had to implement post-9/11, which illustrates a greater stake for private companies in terms of financial burden. Additionally, the nation has a significant stake in ensuring safety to prevent loss of life and the catastrophic consequences of terrorist acts, advocating for a more solidified federal regulation presence.
Following 9/11, federal power increased with the establishment of the Department of Homeland Security and the Transportation Security Administration, centralizing disaster response and airport security. Deregulation in the airline industry prior to 9/11 had led to more competition, lower airfares, and increased efficiency, but at the cost of market instability and job losses when airlines went bankrupt. The regulation pendulum had previously swung towards deregulation due to factors like the Civil Aeronautics Board's restrictive control over airfares, routes, and market entry. However, after 9/11, the recognition of significant security threats brought back a swing towards increased federal regulatory measures.