ABSTRACT
In 1949, the Australian federal government introduced what became known as the ‘Two Airline Policy’, initially by agreement but later endorsed by statute. This policy allowed only two airlines to operate trunk routes between the major cities and, for a time, it required the airline duopoly to operate identical equipment and to offer identical fares. In spite of some subsequent relaxation of constraints, by the 1980s the policy was much criticised for stifling competition and in 1987 the federal government announced its firm intention to remove restrictions on entry into inter-state aviation; it put the industry on three year’s notice. This changing policy was encouraged by a number of factors including an agenda of general de-regulation in Australia during the 1980s (see Starkie 1989). But, de-regulation of the US domestic aviation industry in 1979 was a potent factor and was used as an example by those Commonwealth states pressing for a change in federal policy. South Australia was one such state and it had taken steps some years before to lead by example: it had de-regulated intra-state aviation.
