ABSTRACT
Studies by academic economists were a significant force in the movement towards deregulation of the domestic airline industry in the early 1970s. In the early 1970s, just a few years prior to deregulation, government intervention in the airline industry reached its apex. Advocates of permitting greater foreign ownership argue that it would provide a quick infusion of capital to the distressed airlines. The corollary to foreign investment is competition from foreign airlines on domestic US routes. The crisis in the airline industry that began in the last half of 1990 raised numerous public policy issues. The main reasons seemed to be that the industry was not yet so close to anticompetitive levels of concentration that the impending bankruptcies would be pivotal and, in addition, that a bailout appeared likely to spend taxpayer's money without a real hope of benefits.
