The US airline industry has been taken as an in-depth case study. This thought-provoking book chronicles the evolution of the airline industry and explains what lies ahead for airlines across the globe. The authors present compelling evidence on how the paradigm shift that is taking place in the airline industry is linked to the big-bang approach to deregulation.
There are lessons to be learned from the US as Europe and Asia undergo the (airline) deregulation experience from a public policy as well as a corporate perspective. Deregulation and Competition: Lessons from the Airline Industry also addresses the crucial question of what will happen to the airlines that are in turmoil. In addition to the comprehensive analysis of the airline industry's evolution, the authors draw from extant ...
Chapter Two: Lost Opportunities
As we are about to discuss in this chapter, one of the major reasons for airline deregulation was the expectation of economists and politicians (including Presidents Nixon and Carter) that a large number of new airlines would emerge and make the industry more efficient. In particular, they expected that several new low-cost and low-price airlines would be created similar to the intra-state airlines, Southwest (SW) and Pacific Southwest Airline (PSA). These airlines often sold tickets for 50–60 percent less than the fares of the major full-service airlines. Economists strongly argued that there were no barriers to entry in the industry and that new airlines could fly routes where no discount service was offered.
This chapter describes the rise and fall of two discount ...