How Airline Markets Work...Or Do They? Regulatory Reform in the Airline Industry
82 Pages Posted: 28 Sep 2007 Last revised: 5 Oct 2022
Date Written: September 2007
Abstract
Following a brief review of the U.S. domestic airline industry under regulation (1938-1978), we study the changes that have occurred in pricing, service, and competition in the 28 years since deregulation. We then examine some of the major public policy issues facing the industry: (a) the sustainability of competition and volatility of airline profits, (b) possible market power of dominant airlines, and (c) congestion and investment shortfall in the airport and air traffic infrastructure.
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