Abstract This paper discusses the airline industry within the US from the perspective of post deregulation. The reasons underlying the shift to a deregulated environment are examined in detail as are the competitive forces of supply and demand as they relate to price elasticity. Finally, the overall economic model governing the industry post-deregulation is discussed and is followed by several conclusions and a recommendation supporting some form of mild regulation of the industry.
From the Paper "The airline industry has long been a dynamic and vibrant industry and one that has proved problematic to quantify in real terms from an economic perspective. The airline industry was deregulated in the United States (US) officially in 1978 with passage of the Airline Deregulation Act of 1978 passed by the US Congress (Dilger, 2003, p.46). The reasons for deregulation were varied but they primarily revolved around economic issues. While the airline industry might not have been a true monopoly in that there were a variety of industry competitors, it tended to behave monopolistically in the sense that it, in effect, was an oligopoly."
