Impact of Airline Deregulation

Airline deregulation is the process of removing restrictions on airlines affecting, in particular, which carriers are permitted to serve particular routes. As with other forms of deregulation, the terminology is sometimes criticised, since new forms of regulation are commonly developed to deal with problems such as the allocation of the limited number of slots available at airports.

Airline services were historically heavily regulated, in part because of concerns about monopoly and oligopoly arising from the fact that, in most cases, only a small number of airlines serve a given "city pair" market by providing direct flights between the cities concerned.

Airline deregulation began in the US in 1978 with the Airline Deregulation Act. Many other countries have subsequently deregulated their domestic markets, and a similar process has applied to airline markets within the European Union. However, many international airline markets remain subject to tight regulation.

[edit] Airline deregulation in the United States

Prior to 1978, the Civil Aeronautics Board (CAB) controlled many aspects of domestic aviation in the United States. In particular, airlines required permission to serve any given route and incumbents could raise many obstacles to the granting of permission. The system was dismantled as a result of the Airline Deregulation Act.

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