CONSOLIDATION, AND THE FUTURE

The Airline Deregulation Act, signed into law in 1978, removed Federal Government oversight and control over much of the airline industry including fares, routes, and the creation of new airlines, with the aim of creating a free market in the commercial airline industry and driving an increase in the number of flights, a decrease in fares, and increasing the accessibility of air travel for American consumers. Following its passage, deregulation had a swift and significant impact on the industry: two of the four largest airlines in the United States before deregulation, Eastern and TWA, went bankrupt; Pan Am, at one time the single largest carrier in the United States, disintegrated by 1991. After their demise, new carriers emerged including Southwest, while others, such as Delta, accelerated their status as a major national carrier. A frenzy of merger and acquisition activity followed, resulting in the supremacy of four airlines: Southwest, American, Delta, and United.

Top U.S. Airlines: 1977-2002

 While deregulation and consolidation has generated many benefits to consumers including lower-cost fares and optimized, regular routes between major destinations, the recent concentration of market share among just four carriers has resulted in several significant drawbacks, including most notably the decline of regional airlines and the disappearance of less indemand routes within smaller markets. The impact of this decline is troublesome to the flying public and within the industry.