ABSTRACT
For inter-state airline services, regulatory power rested with the US (Federal) government, which had long controlled both route entry and fare levels. In 1978 the US Congress passed the Airline Deregulation Act, and the long-standing structure of inter-state services was soon transformed. Many new airline companies were established; almost all of them adopted a low-cost, low-fare strategy. A major consequence of deregulation was the re-shaping of airline networks. In general, the majors adopted a hub-and-spoke pattern, usually with at least one daily flight to each non-hub port. Although a large proportion of the Canadian population lives close to the border with the US, Canada's network of domestic airline routes is still somewhat separate from the domestic network in the US. In response to the low-cost competition of WestJet, Air Canada embarked on some low-cost initiatives of its own. And in 2002, it established Zip as a low-cost airline operating old B737-200 aircraft in western Canada, in direct competition with WestJet.
