Subsidizing Of The Airlines Industry

20 Pages 5038 Words

CAB was phased out. The Federal Aviation Administration (FAA) retained authority to regulate air safety. The beneficial results of this deregulation were overwhelming. Airline ticket prices fell substantially in virtually all markets - small, medium, and large. Moreover, increased flights resulted for markets of all sizes.
The primary reason for these reduced prices is that after deregulation airlines could compete on price, working towards a perfect competition. Additionally, new airlines were allowed to enter the industry, and their competition further reduced prices. All this price competition also forced airlines to cut costs and reduce expenses, allowing even lower prices. In addition, some new airlines specialized in low cost, discount prices for basic, no frills, discount service, reducing prices even more. Southwest Airlines has been the most successful of these new discount airlines, and it is now the sixth largest domestic air carrier. The primary reason for the increase in available service is that under deregulation, airlines were...