Airline Deregulation and Public Policy

An assessment of the effects of airline deregulation on travelers and carriers indicates that deregulation has provided travelers and carriers with $14.9 billion of annual benefits (1988 dollars). Airport congestion, airline safety, airline bankruptcy, and mergers are also analyzed and found in most cases to have reduced benefits. But, these costs should not be attributed to deregulation per se, but to failures by the government to pursue appropriate policies in these areas. Pursuit of policies that promote airline competition and efficient use of airport capacity would significantly increase the benefits from deregulation and would provide valuable guidance for other industries undergoing the transition to deregulation.