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“Turbulent" is the best way to describe the airline industry of the 1990s. Since deregulation in 1978, terms such as "air wars," "hubs," "frequent-flyer," and, of course, "Chapter 11," have become a familiar part of airline discussions. Long gone are the days of a bloated, unresponsive, complacent industry that must verify its every move with Washington bureaucrats. Although the level of uncertainty and instability in the airline industry has increased since the days of government regulation, most observers agree that deregulation has had some success (Sandler 1988, p. 332). However, it remains an open question as to whether or not the deregulated airline industry is headed in the direction of the public interest. This article will explore and evaluate changes that have taken place in the airline industry since deregulation. The first section takes a step back to review the history of regulation and the reasons policymakers chose to deregulate the industry. The second examines empirical data concerning concentration and con testability. The third and fourth sections consider the dynamics of the industry in the context of structural changes and strategic developments, such as hubs and frequent-flyer programs. Finally, recommendations are made for changes in public policy to improve consumer welfare.

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This issue is also considered v.9 of the initial publication series of Major Themes in Economics.

Mislabeled as v.9 no.1 on the front cover; labeled as v.8 no.2 on the title and contents pages.

No cover/title page date shown on piece.


©1996 by the Board of Student Publications, University of Northern Iowa



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