ABSTRACT
Economists usually describe the certificated airline industry as closely approximating an oligopolistic market structure. One expectation of deregulation was that carriers would have relatively free access to markets because of the mobility of the airlines' chief assets—aircraft. Airport terminal capacity can also be a barrier to entry for new and existing carriers seeking to enter new markets. The airline industry historically has tended both to produce excess capacity and to price its product below fully allocated costs. The Federal Aviation Administration (FAA) regulates most aspects of airline operations that relate to safety and navigation, as well as to environmental conditions. The National Transportation Safety Board investigates all air carrier accidents and makes recommendations to the FAA. The airline industry historically has tended both to produce excess capacity and to price its product below fully allocated costs. Airline employees are men and women with highly developed skills and with correspondingly high incomes.
