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Essay / Research Paper Abstract
This 3-page paper discusses the airline industry and the impact of the 1978 deregulation act on it in terms of competition and fares.
Page Count:
3 pages (~225 words per page)
File: D0_MTairder.rtf
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Unformatted sample text from the term paper:
government, restrictions were lifted, making the airlines in the industry more vulnerable to market forces. Looking back on that time almost 30 years later, there were advantages and disadvantages to
the airlines and customers alike. The advantage of any deregulation, at least in theory, is that the "invisible hand" of market forces
can take over in an industry. This means that price is elastic, and it adjusts to the demand. If demand is high, prices rise. If its low, prices fall.
Market forces also allow for more competition to come into the ring. Before deregulation, only one or two airlines were assigned specific routes.
This created a type of oligopoly, one in which an airlines company could pretty much choose whatever price it wanted (and the consumer couldnt do a thing about it).
Deregulation, on the other hand, allowed a myriad of competitive airlines to come into the market. Many failed, some managed to keep on
surviving and either broke out on their own or were merged with other airlines. The truth is, the industry itself has very high barriers to entry, as it requires specialized
knowledge and huge access to capital, which many run-of-the-mill businesses just dont have. But a competitive industry has also paved the way
for the success of the smaller "niche" airlines such as JetBlue (which is a 1990s phenom) and Southwest Airlines (launched during the early 1970s, just before deregulation). The deregulation allowed
Southwest Airlines, for example, to play with its prices to the point that it could undercut the competition (it helped that the airline, from the start, had an extremely lean,
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