Airlines Symposium Introduction
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Airlines were not the first industry in the U.S. to undergo deregulation, but they were perhaps the largest and most visible demonstration of the potential for industries to transition from intensive, traditional regulation to a competitive setting. Economists and others who predicted benefits from deregulation were important forces in the movement that culminated 40 years ago with the Airline Deregulation Act of 1978. But few predicted some of the fundamental forces that would remake—and continually remake—the industry since that time.
These forces include operating characteristics such as low cost service, entry and exit, network effects, service quality, and hub-and-spoke versus point-to-point service. They also have included strategic pricing, changes in passenger mix, loyalty programs, fortress hubs, and more. And they have confronted passengers with complex seating choices, bag and cancellation fees, and increasingly complex and dynamic fares. And for good measure—with mergers,...