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Regulation of Airline Industry - Essay Example

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Regulation of Airline Industry

An implication of these mergers is that the few surviving consolidated airline companies may exhibit oligopolistic behavior. This may include monopolizing of routes and charging excessive rates for some fares. In this regard, the industry competition is somehow diminished. Other airline companies may experience substantial profit reduction as their service offerings become relatively less competitive as compared to big industry players.
In view of the above, the government must intervene by implementing policies that would promote competition within the airline industry. By enforcing policies such as the prohibition of oligopolistic/monopolistic business practice, the government is able to promote greater efficiency in the market (Samuelson & Nordhaus).
As the government deregulated the airline industry, airlines have become better equipped in negotiating their operating arrangements with different airports as well as their entry and exit routes. Furthermore, these airline companies have become better in levying airfares and supply flight based on market demand (Doganis, "The Airline Business"). The deregulation boded well for both airline companies and their customers. ...Show more

Summary

The deregulation of the US airline industry in 1978 has brought about myriad economic benefits for both airline companies and their customers. However, current problems in the industry have raised the question of whether government regulation may be indeed crucial in addressing prevailing conditions…
Author : greenadrianna
Regulation of Airline Industry essay example
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