ABSTRACT
Airlines provide an interesting example of how an industry evolves when freed from government regulation. This chapter provides a brief history of the government's involvement in the industry and the deregulation movement. It describes the technology of the industry and introduces some terminology that will be useful. The deregulation movement was based largely on the performance of the California and Texas intrastate airlines. Airline safety invariably comes up in any discussion of airline deregulation. Safety standards continue to be enforced by the Federal Aviation Administration. The deregulated airline industry continues to evolve, apparently toward a system with a handful of large US airlines serving domestic and international routes, with several smaller specialty carriers that serve particular market niches. The use of concentration ratios based on revenue passenger miles gives a distorted impression of the degree of competition in the airline industry. Airlines also vary fares and the number of discount seats available by time of day.
