Implementing U.S. Airline Industry Deregulation: Lessons for Emerging Countries

Abstract

Airline deregulation began in the United States in 1978, introducing dramatic changes that opened the door to competition, lowered fares, and reshaped the industry. It also created new problems, leaving major carriers in a precarious financial condition, increasing congestion in airport terminals and in the air, and leading to mergers that could eventually threaten the competition the original reforms were designed to encourage. During the past 30 years, new issues have emerged and become prominent—particularly safety and security. After more than a quarter century, it is important to review what has happened and to delineate the lessons that can be learned from the deregulation experience.