ABSTRACT
In a paper delivered to the Royal Aeronautical Society in London in March 1992 the Chairman of United Airlines, Stephen Wolf, argued that competition would continue to remain a feature of the scheduled airline industry despite increasing levels of market concentration. Whilst this seems a reasonable assertion, it is expectations about the extent and nature of the competition that are of more crucial concern. Deregulation unleashed a considerable amount of competitive pressure on US carriers in their domestic markets, much of it emanating from low cost new entrants to the interstate markets. Substantial gains in efficiency resulted from this competition forcing the former trunk carriers to reorganise and reduce their operating costs. Average fares fell in real terms and demand for airline services doubled over a decade.
