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Ten years ago the Congress passed the Airline Deregulation Act, ending government control over the routes airlines could serve and the prices they could charge. Deregulation has led to far-reaching changes in the industry. At the request of the Senate Governmental Affairs Committee, this study reviews these developments and discusses policies that the Congress might consider for improving the industry's performance. In keeping with the mandate of the Congressional Budget Office to provide objective analysis, it makes no policy recommendations.

Daniel P. Kaplan played a major role in the development of the project and wrote the report along with Mark R. Dayton. It was prepared in CBO's Natural Resources and Commerce Division under the supervision of Everett M. Ehrlich and Jenifer A. Wishart. Sandra Christensen, David Lindeman, and Linda Radey of CBO made helpful suggestions. Severin Borenstein, Alfred E. Kahn, and Daniel Kasper offered a number of valuable comments. The manuscript was edited by Francis S. Pierce. Margaret Cromartie typed the many drafts, and Nancy H. Brooks and Kathryn Quattrone prepared the report for publication. The cover photograph is from Federal Aviation Administration files.
 

James L. Blum
Acting Director
July 1988
 
 

SUMMARY

I. AN OVERVIEW OF AIRLINE DEREGULATION

• The Regulation and Deregulation of the Airline Industry
• The Effects of Deregulation
• The Safety Issue
• The Outlook Under Deregulation

II. THE INDUSTRY'S CONSOLIDATION

• Advantages of Size
• Mergers

III. AVIATION SYSTEM CAPACITY AND THE PROBLEMS OF CONGESTION AND DELAY

• The Airway System
• The Airport System
• Management of Congestion in the Aviation System

IV. OPTIONS FOR INCREASING COMPETITION AND REDUCING CONGESTION

• Increasing Competition in the Industry
• Reducing Congestion

This document is available in its entirety in PDF.