ABSTRACT
AirlineDeregulationhascapturedtheinterestofawideaudiencenotonlybecause ofitsimpactonlargenumbersofconsumers,butalsobecausetheresulting
transformedindustryhasborneincreasinglylessandlessresemblancetothe
confidentpredictionsofthosethatadvocatedthepolicy.Understandingthe responseofincumbentcarrierstosuddeneconomicfreedomhasprovideda fascinatinglyclearinsightintothewaysinwhichtheirmanagershavereactedto competitionandmoreimportantly,howtheyhavesoughttoconstrainthe competitiveprocess.Manyofthesurprisesthateconomicderegulationofthe
scheduledairlineindustryhasproducedhavestemmedfromaconsiderable
underestimationoftheingenuityofsuchindividualstodeviseandexploitmeansby
whichtoprotectwhatweretobecometheirhighlyvulnerablemarkets.Inmany
respectsitisasiftheindustryhademergedfromfortyyearscapturedinaregulatory timewarptoreplicatethetypeofstrategicbehaviourobservedinotherbusiness sectors.
