by Kenneth Button
Cato Institute
April 09, 2014
Regulation
Since most economic controls over domestic commercial aviation ended in the late 1970s, traffic has grown by orders of magnitude, inflation-adjusted fares have fallen, computerization has revolutionized ticket-buying, frequent flier points have become a second currency, the range of routes available has expanded out of all recognition, and low cost carriers have come, and just as often gone. Flying is no longer an experience; it has become a transportation product. However, the 1978 Airline Deregulation Act only partially liberalized the U.S. domestic airline market. One important restriction that remains is the lack of domestic competition from foreign carriers. Much is often made in the media of short-term frictions in the market, but more important is the thinning of capacity for some smaller local markets. A solution to both issues is to allow market forces to work even more efficiently, including by opening the domestic airline industry to foreign competitors.



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