The stages of US airline deregulation

I. Regulation

Although deregulation of US airlines was initially thought to lead to an increase in the number of airlines whose different service concepts, market segments, fleets and route structures would lead to new competition, traffic growth and lower tariffs, the result was a complete one Cycle and only led to virtual monopoly. During its development, three different stages occurred.

The regulation itself dates back to 1938, when Congress passed the Law on Civil Aviation. The five-member Civil Aeronautics Board (CAB), which was formed two years later, regulated tariffs, approved routes, granted grants and approved interline agreements.

"Regulation by definition replaces the regulator's judgment of the market," said Elizabeth E. Bailey, David R. Graham and Daniel P. Kaplan in their book "Deregulating the Airlines" (MIT Press, 1985). P. 96).

In fact, the environment was such that an airline often had to resort to the purchase of another airline to obtain its route authority. For example, Delta Air Lines, which has long been interested in offering nonstop flights between New York and Florida, has been consistently requesting the CAB to exercise its rights. The regulator, however, felt that Northeast, a small local service company plagued with low traffic, financial losses, and inclement weather due to its route network, needed the revenue potential of the lucrative Florida route to restore health, and instead the authority received.

Undaunted, Delta finally resorted to the acquisition of the regional airline and subsequently received approval on 24 April 1972 for the merger. However, these extremes would not be needed in the near future.

A look into the future was already possible in California and Texas. Since the CAB was not responsible for local air traffic, it was unable to exercise the tariff or track authority for domestic airlines and these airlines. Typically, it offered a high-frequency, clean-cut, no frills service at half the tariffs to which regulated "trunk" companies were forced to charge consistently for both revenue and traffic growth.

For example, Air California and PSA Pacific Southwest Airlines, operating in the Los Angeles-San Francisco market, saw annual traffic increase from 1.5 million passengers in 1960 to 3.2 million in 1965. Southwest Airlines based in Texas also offered cheap flights between Dallas and Houston and other Texas points. These airlines have shown that real deregulation can lead to tariffs that are accessible to average income passengers, enable a wider choice of carriers and service concepts, and increase traffic.

Passengers and the government increasingly denied regulation in the mid-1970s, citing the examples of Air California, PSA, Southwest and other domestic airlines as evidence that deregulation could benefit passengers and passengers to their mutual benefit. At least that was the theory.

Eventually, President Jimmy Carter signed the Airline Deregulation Act on October 28, 1978, eliminating the need for CAB approval for route entry and exit and reducing most of the current fare restrictions. Even these would eventually be eliminated when the Civil Aviation Authority was disbanded in its now famous "Sunset" in 1985.

At the time of the event, eleven "trunk" carriers at that time controlled 87.2 percent of the domestic passenger miles (RPMs), while 12 regional, 258 commuter, five supplemental and four intra-data packages compensated for the RPM distribution. What would cover the sky if the dust of deregulation had settled?

II. Deregulation

Stage One: New Generation Airlines:

Like the domestic airlines in California and Texas, an increasing number of non-traditional, deregulation-induced airlines infiltrated the US market. The first of these, Midway Airlines, was the first to receive certification following the passing of the Airline Deregulation Act, and the first to begin service in 1979.

Midway was founded three years earlier by Irwing Tague, a former Hughes Airwest manager, and in November of that same year launched the low-fare high-frequency Rainbow Jet service from Midway's underutilized Chicago Airport, which was once the only airfield in the city By the time O & # 39; Hare was built and Midway wanted to be resurrected in the same way as Southwest on Dallas' Love Field – with five single-grade, 86-passenger, former TWA DC-9-10s, first to Cleveland, Detroit and Kansas City , The low-price structure promoted rapid growth and strategically hoped to penetrate the Chicago market without attracting O & # 39; Hare's competition from established airlines.

However, as an Midway employee, the author can confirm that he has quickly learned three important lessons, suggesting that he must remain extremely flexible in order to survive under the prevailing competitive conditions of the market:

Although it served a secondary airport in the Chicago area, it was still primarily competing in the Chicago market.

Secondly, the load factors declined as incumbents lowered their tariffs.

Finally, the high-density, low-price strategy that had become a major feature of deregulation attempts was ineffective as an airline attempted to serve a particular market segment, such as the higher-yielding business, which offered more comfort and security. Service was expected.

As a result, Midway changed its strategy by introducing a conservative cream-colored finish. Business cabin seating for four in a classroom with greater legroom; additional hand luggage room; and improved free on-board wine service in exchange for higher than the Rainbow Jet fares, but still under the unrestricted bus rates of major airlines.

The newly implemented strategy called "Midway Metrolink" significantly reduced the number of seats per aircraft. For example, while the DC-9-10 and -30 carried 86 and 115 passengers, respectively, they were reconfigured for 60 and 84 as part of the new Metrolink strategy.

Apparently successful, it triggered explosive growth, from initially 56,040 passengers in 1979 to nearly 1.2 million in 1983.

Capitol Air, another deregulatory converted airline in which the author also participated, also experienced initial rapid expansion. The company, founded in 1946 as Capitol Airways, had undertaken domestic charter flights with Curtiss C-46 Commandos and DC-4s, eventually acquiring larger L-049 Constellations and becoming World Airways, Overseas National (ONA), the fifth largest US subsidiary in 1950, Trans International (TIA) and Universal. It acquired in January 1960, the first of the largest used Super Constellation fleets and finally operated in the 14 years from 1955 to 1968 17 L-749, L-1049G and L-1049H.

The charter airline Capitol International Airways received its first pure jet, a DC-8-30, in September 1963, and subsequently ran four versions of the McDonnell-Douglas design, including the -30, -50, -. Series 61 and -63, which replaced the Lockheed Constellation as a workhorse of their fleet.

Capitol received the planned approval in September 1978 and opened the New York-Brussels service on May 5 of the following year and the second transatlantic sector Chicago / Boston-Brussels on June 19. was not regulated by the CAB and therefore carried out its own "deregulation experiment", sublimating the proven charter economy of high-density single-class tariffs, low unrestricted tariffs and even standby tariffs, to achieve low seat mile costs and profitability.

The planned concept with the brand name "Sky Saver Service" always ensured above-average demand and triggered a significant expansion of the fleet and the route system. By 1982, six DC-8-61s, five DC-8-63s and five DC-10-10s were deployed from a New York-JFK hub to seven domestic, three Caribbean and three European passenger base locations: 611,400 passengers in 1980 , 1,150,000 in 1981 and 1,824,000 in 1982.

Passengers who did not know about deregulated airlines, whose low tariffs could only lead to profitability with second-hand aircraft, high-density seats and non-union employees with lower wages, often criticized Capitol Air's and the non-interline policies Refusal to provide meals and hotel rooms during this time delays and compensation for missed connections with other airlines. Nonetheless, New York-Los Angeles market rates ranged from $ 149 unlimited on a return trip to $ 189, while the majors' unlimited fares on the market were $ 450. As a result Capitol Air utilization factors exceeded 90 percent.

By September 1981, ten new air carriers received the operating permit and the dedicated service.

"The first effects of deregulation were dramatic," Anthony Sampson wrote in "Empires of the Sky: The Politics, Competitions and Cartels of World Airlines" (Random House, 1984, p. 136). "A new generation of operators saw the possibility of expanding small businesses or setting up instant airlines that could outperform tariffs on local routes, forgoing much of the construction and bureaucracy of major airlines, and using their flexibility to hit the giants at their weakest points where they could return quickly. "

It created four types of airlines, which had a significant impact on the traditionally regulated aviation industry.

The first were deregulation-led launches such as Air Atlanta, Air Florida, Air One, Altair, America West, Best, Carnival, Empire, Florida Express, Frontier Horizon, Jet America, Midway, Midwest Express, MGM Grand Air and Morris Air , Muse Air, New York Air, Northeastern International, Pacific East Air, Pacific Express, PEOPLExpress, President, Reno Air, SunJet International, Hawaii Express and ValuJet.

The second were deregulation-driven local services companies, including Allegheny, Frontier, Hughes Airwest, North Central, Ozark, Piedmont, Southern and Texas International, which quickly outperformed their previous regulatory concentrations.

The third group, the cross-border airlines, included companies such as Air California (later AirCal), Alaska, Aloha, Hawaii, PSA, Southwest and Vienna Air Alaska.

The fourth was the deregulation-transformed charter aircraft such as Capitol Air, Trans International (later Transamerica) and World Airways.

Although some of these airlines, notably Air One and MGM Grand Air, aimed at very specific market niches with premium seats and services, the vast majority of airlines, regardless of whether they grew up, grew or matured through deregulative parenthood a profitability of multi-core assets including, of course, low unrestricted fares, one-haul, short- to medium-haul routes, high-density seats, restricted on-board service, lower wages for union-free workers and medium-haul aircraft. Medium capacity trijets such as the 727, and small-capacity and short-range twinjets such as the BAC-111, the DC-9, the 737, and the F.28.

All achieved high utilization factors, generated enormous traffic in existing and emerging markets and created considerable competition.

"In this regard," Barbara Sturken Peterson and James Glab wrote in their book "Rapid Descent: Deregulation and the Shakeout in the Airlines" (Simon and Schuster, 1994, p. 307), "deregulation seemed like magic."

Stage two: Monopoly:

Although the established, traditionally regulated major airlines have temporarily lowered their tariffs in selected markets with high deregulation and airline concentration in order to maintain their passenger base, established airlines, which have long been promoted and protected by regulation, were not in favor of viable operations structured them. But even in those cases where they managed to push competition out of the market, another cheap upstart seemed to be waiting in the starting blocks to fill the gap.

The incumbent carriers therefore had the choice to abandon carefully developed markets or crack financial resources to withhold passengers until they themselves slip into bankruptcy. It quickly became apparent that the tariff reductions triggered by deregulation would become a permanent feature of the "new" unregulated aviation industry, and the major airlines eventually realized that they needed to fundamentally restructure or succumb to the new generation of airlines. Almost every aspect of their activity would eventually change.

The first aspect addressed was the track system. These route systems traditionally consisted of point-to-point nonstop services originating in the 1940 and 1950 CAB route entitlements. In fact, they did not contain any inherent "system" and instead consisted of unbalanced geographical contexts leading to revenue losses for other airlines and inefficient, inefficient use of existing fleets. What was really needed was a central "collection point" for self-nutrition.

On the basis of bilateral agreements, European airlines operated the first "hubs" that, for example, transported passengers from Copenhagen to Athens via an interconnection point such as Dusseldorf. Any passenger flying the Copenhagen-Dusseldorf or Athens-Dusseldorf sector could theoretically switch to one of the airlines' outward-pointing flight spokes, significantly increasing the number of potentially-served markets. These European hubs also showed increased aircraft utilization, improved traffic flow, a larger market base than conventional point-to-point services, which could only have been supported by start and end traffic, and the retention of the connecting passenger.

"Although passengers prefer frequent nonstop service, such service can be quite costly," said Bailey, Graham, and Kaplan (p. 74). "Airlines are therefore faced with strong incentives to build hub-and-spoke operations … By combining passengers with different origins and destinations, an airline can increase the average number of passengers per flight and thereby reduce costs At the same time, hub-and-spoke operation provides a more convenient service for travelers in less-traveled markets. "

The first US hub had its origins in the 1940s, when the government awarded Delta some viable long-haul routes in return for agreeing to supply several small communities from Atlanta while trying to enter the South.

"All of these routes have become" spokes "leading to a delta hub in Atlanta," says Peterson and Glab (p. 120). "This was associated with the convincing advantage of passenger connection."

Allegheny, a former Pittsburgh-based local service carrier with no specific long-term development plan, has made significant gains on its east and mid-Atlantic route network, which has gradually "developed" due to its funnel in Pennsylvania. Improving the balance between the predominantly commercial and short-haul network with longer-range and recreational destinations continued to drive this development and in 1978, 73 percent of the passengers were connected. In 1981, this number rose to 89 percent, which means that 89 percent of the passengers to Philadelphia and Pittsburgh did not fly to Philadelphia and Pittsburgh.

The hubs Delta and Allegheny were just the beginning of the phenomenon, as the concept has created more than just a concentration of airlines in a given city. Instead, this resulted in a definitive monopolistic strangulation that excluded any competition.

For example, at four of the major US hubs (Atlanta, Chicago-O'Hare, Dallas-Fort Worth and Denver), "the two largest airlines simply marginalized or made virtually impossible the expansion of other airlines to gain market share," wrote Julius Maldutis in the airline competition at the 50 largest US airports since deregulation (Salomon Brothers, Inc., 1987, p. 4).

In Atlanta, where both Delta and Eastern hubs used to be, the possibility of significant third-party competition was ruled out. For example, in 1978 Delta's hub traffic percentages were 49.65% and Eastern 39.17%, and nine years later those values ​​had risen to 52.51% and 42.24%.

The analysis of the 50 largest airports (accounting for 81.1 percent of US planned passenger numbers) revealed that only ten of these airports could have been considered less concentrated. On the other hand, 40 (or 80 per cent) of the airports were overly concentrated. The ten most concentrated airports had an airline with a passenger share of more than 66 percent.

In St. Louis, where both TWA and Ozark had hubs, the former had a market share of 39.06 percent, while the latter had a market share of 20.21 percent in 1978. In 1986, these numbers rose to 63.16 and 19.68 percent, respectively. The following year, after TWA acquired Ozark, its only other major competitor, it converted that share to 82.34 percent, with nine other domestic US airlines sharing the remaining 17.66 percent. An airline computer list listing all airlines operating between the three major New York airports and St. Louis on December 1, 1995 revealed 27 flights that day. None of them was operated by another airline than TWA! That was power.

Similarly, the deregulation of the Piedmont, which in 1977 held only 10.19 percent of the market in Charlotte, North Carolina, did so a decade later, giving it a monopoly value of 87.87 percent after establishing a hub there. The same conversion took place in Pittsburgh with Allegheny / USAir / US Airways-43.65 percent in 1977 and 82.83 percent in 1987.

"Since a large proportion of city pairs markets can not support convenient nonstop service, hub-and-spoke operations have proven to be the dominant strategy of airlines since deregulation," Bailey, Graham and Kaplan write (p. 196). "There has been a significant shift from the regulatory vision of linear systems to sunbursts of routes."

Apart from the hubbing concept, the major airlines have made some other fundamental changes. For example, airplanes have been reconfigured for higher density seating and, in some cases, for seating in a class, while business cabins have expanded first class and coaches on selected routes. First-class cabins were later completely replaced by business-class cabins in a trend pattern triggered by some deregulation specialty airlines.

Inefficient aircraft types were gradually replaced by new-generation designs, and daily occupancy increased from 8.6 hours in 1971 to 10.3 hours in 1979. In the 1970s and early 1980s, average aircraft size increased in long-haul sectors, while in increased in the late 1980s. In the 1980s, the size increased in all categories. In the early 1990s, pure-jet technology penetrated all markets for the first time – from 50-passenger regional aircraft to 500-passenger intercontinental aircraft.

Employment was also transformed. According to Robert Crandall, former chairman and chief executive officer of American Airlines, "deregulation is deeply hostile to work … there has been a massive transfer of wealth from airline employees to airline passengers."

The deregulation of airlines' tariff reductions has resulted in a lower revenue and earnings base from which funds have been diverted to traditionally high salaries and benefits packages. This required higher levels of employee productivity, over-reliance, part-time, union and profit-sharing schemes. In some cases, employment was actually provided by contracted primary care companies to reduce benefits. The author participated in the first ground service experiment at JFK International Airport between Triangle Aviation Services and Royal Jordanian Airlines.

"As a relatively new but rapidly evolving concept, the service provider provides the staff on a contractual basis to the respective carrier, for which, according to Airport-Based Airline Careers (Hicksville, New York, 1995, p. 9)," The Service Company then the staff, run the training programs (if any) and set the hourly pay and benefits package. "

After wearing Royal Jordanian's uniform and performing all ground operations, I often felt "trapped in the middle" and at the same time tried to please both the passenger and the airline. After all, they were both my clients and exposed the inherent conflict of the concept.

Lower wages and perks for airlines go back to Crandall himself, who has devised a plan to reduce employment costs with a "B-scale" payment system that initially provided lower salaries and longer life expectancy to newly hired employees. Achieve the higher "A" scale "Levels.

"American (myself) was ready to grow in size tremendously, and it had a strong incentive to do so," said Peterson and Glab (p. 136). "The more it expanded, the more workers it would hire – all at lower wages on the B-scale – and the more its average cost would go down."

According to Bailey, Graham and Kaplan, regulation in its Deregulating the Airlines work has created above-industry monetary and performance compensation. "It is now clear that inflexible labor rules and higher wages flourished as competitive during regulation, and airline employees seem to have benefited greatly from CAB's protections." (P. 197)

Another need, which was triggered by the deregulation, was the increasing dependence on automation. American Airlines, also headed by Crandall, created the first computerized flight reservation system, Saber, which was immediately followed by United's Apollo system. As a powerful sales tool, these automated systems were purchased by travel agents who paid a different fee to their owners for each booking, while smaller airlines had to negotiate for representation.

These systems were so sophisticated and diverse that their information was gradually sublimated in every aspect of flight operations. The "reservation modes" include reservations, itineraries, fares, hotel, touring and ground transportation bookings, frequent flyer tracking and ticketing; their "Departure Control Systems" (DCS), which enable the check-in of passengers and the issuing of boarding passes; and their "control modes," which use this information for the weight and balance of the aircraft, as well as for the creation of loading plans and bills.

Only with these ingenious flight reservation systems have airlines been able to implement yield management programs, ie the determination of the optimal balance between low passenger fares and profitable maximum prices, based on seasonality, time of departure and demand, comfort, capacity and competition, in order to make a profitable flight to produce. For example, in a consultation of the flight reservation system on December 1, 1995, American Airlines listed 27 separate fares between New York and Los Angeles, ranging from an unrestricted price of $ 1,741.82 for a simple first-class ride to a strong one limited return fare of $ 226.36. On the codes in the column "Tarifbasis", z. For example, "KPE7HOLN" was accessed to reveal the inherent limitations – whose expression included multiple pages!

Another fundamental change for the deregulated industry was the structure as well as the relationship of regional and commuter transport companies to majors. With history sometimes being cyclical, local airline companies have proven to be in the habit of relinquishing small, sparse routes when they once again bought jet aircraft, but now with two main differences: (1). Today's regional offices have never been restricted to these routes by regulation, and (2). Although they were rapidly expanding with their own fleets of pure jet, they were trying to coexist with the majors through code-sharing arrangements in which their planes appeared in large colors and their flights carried the two letters of the affiliated airline, rather than competing with them codes ,

Out of the 300 destinations Delta landed at the end of 1995, 85 were reached by one of the four code-share airlines Delta Connection, including Atlantic Southeast Airlines (ASA), Business Express, Comair, and Skywest – the first to join this time had no pure jet equipment possessed. Outwardly, Americans bought their own commuter delivery airlines and called them "American Eagle" together.

Nevertheless, the restructuring required by the liberalization of the main airlines was completed.

When TWA complied with Capitol Air's unrestricted transcontinental bus fares, the previous addendum recorded 30 passenger bookings in DC 8-61 aircraft, which otherwise could accommodate 252 people, and canceled its flights. In a similar situation, the established utilization factors of USAir and upstart PEOPLExpress on the Buffalo Newark market were consistently lower by at least 20 points between August 1981 and June 1982.

"The data suggests that many consumers have opted to travel with the airline with greater notoriety and facilities if the fare is the same," Bailey, Graham and Kaplan continue (p. 106).

Finally, the competition forced Capitol Air to realign its route system to include an increasing number of ethnic, underserved and underserved markets until the majors entered the area and the airline had no choice but to apply for Chapter 11 bankruptcy protection and to cease operations on 25 November 1984.

Halfway there was also an opposition of the Major Carrier. Regardless of the strategy with which the company defines its optimal niche, it has always been counteracted by the aggressive majors. With the acquisition of Air Florida in 1984, the aircraft was reconfigured with seats in two classes. On both sides of a seesaw, however, the company soon returned to the single class and back in November 1989 back in the double class at this time, they operated an 82-member fleet with the affiliation "Midway Connection" and carried 5.2 million passengers per year.

But over-expansion and the attempt to replace Eastern at its Philadelphia hub in economically bad times in direct competition with USAir led to its own decline two years later, on November 13th.

"Obwohl diese zahlreichen Strategien auf eine ständige Neubewertung ihres ordnungsgemäßen Verlaufs hindeuteten, wiesen sie auch auf die Instabilität der Marktbedingungen in deregulierten Luft und die Entschlossenheit der Fluggesellschaft hin, in diesen zu bleiben, und auf ihre Widerstandsfähigkeit, sie mit einer Gegenüberstellung von Servicekonzepten, Kabinenkonfigurationen und Sitzen zu steuern Dichten und Marketingstrategien "nach The McDonnell-Douglas DC-9 (Hicksville, New York, 1991, S. 59).

Capitol Air und Midway waren nur zwei Beispiele für liberalisierte Fluggesellschaften, die den radikal umstrukturierten Majors erlegen waren. Von den rund 100 Fluggesellschaften, die seit der Verabschiedung des Airline Deregulation Act zertifiziert worden waren, war Ende 1995 nur noch eine, America West, in Betrieb.

"(Die großen Fluggesellschaften) setzten eine Strategie um, mit der sie den Wettbewerb der Billigflieger in ihrem eigenen Spiel schlagen konnten, indem sie trotz hoher Verluste auf bestimmten Strecken vergleichbare Tarife aggressiv ausweiteten und in Rechnung stellten, um in einigen Fällen die Preise zu halten , um Marktanteile zurückzugewinnen … Die großen Fluggesellschaften wurden mächtig und monopolistisch, indem sie den Wettbewerb dort ausschlossen, wo er auftrat ", so das Austrian Airlines Passagier-Handling-Handbuch (JFK, Hicksville, New York, 1990, S. 10-11).

Stufe Drei: Megaträger:

Sobald die Erweiterung der Fluglinie in Gang gesetzt war, schien sie sich selbst zu treiben und der Trägheit zu widerstehen. Monopole kennen per Definition keine Grenzen. Der logische nächste Schritt war die Marktdurchdringung im Ausland.

Im Gegensatz zum US-Inlandswachstum "war es für eine US-Fluggesellschaft viel schwieriger, Zugang zu einem neuen Auslandsmarkt zu erhalten als zu einem neuen Inlandsmarkt, da die internationalen Luftverkehrsdienste noch immer durch bilaterale Abkommen zwischen den USA und ausländischen Regierungen streng geregelt waren ", schrieben Peterson und Glab (S. 283). "… Um unmittelbare Betriebsrechte für ein fremdes Land zu erlangen, musste ein US-Luftfahrtunternehmen die Streckenbehörde von einer anderen US-Fluggesellschaft kaufen."

Es wird daran erinnert, dass es sich bei dem Phänomen um eine virtuelle Wiederholung der inländischen Regierungsstruktur der USA vor der Deregulierung handelte. Ein solcher Kauf wurde im letzteren Fall in der Regel nur gewährt, wenn sich die von der Fluglinie zugelassene Fluggesellschaft in finanziellen Schwierigkeiten befand und die durch den Verkauf erzielten Einnahmen zur Aufrechterhaltung der Rentabilität benötigt wurden.

Pan Am war insbesondere von den Deregulierungseffekten betroffen und musste seinen lukrativen Geschäftsbereich Pazifik zusammen mit Flugzeugen und Bodeneinrichtungen für 750 Millionen US-Dollar an United verkaufen, um flott zu bleiben. United, schon damals eine große, finanziell gesunde Fluggesellschaft, verfügte jetzt über ein globales Streckennetz mit angemessener Inlandszufuhr.

Wichtiger als der Verkauf waren jedoch die weitreichenden Auswirkungen. "Der Kauf der Pacific Division von Pan Am durch United Airlines sollte einen Dominoeffekt auslösen", so Peterson und Glab (S. 148) Northwest wusste, dass es ein wesentlich größeres eigenes Heimnetzwerk brauchen würde, und der schnellste Weg, dies zu erreichen, wäre eine Fusion. "

Bis Ende 1986 hatte sie genau das getan, indem sie Republic erwarb, die 1979 aus der Fusion von North Central und Southern und 1980 aus der sekundären Übernahme von Hughes Airwest hervorgegangen war, und Northwest mit dem Status eines Monopolisten an allen Drehkreuzen belohnte wie Minneapolis mit einem Marktanteil von 81,55 Prozent.

Delta befürchtete, mit Fluggesellschaften dieser Größenordnung nicht mithalten zu können, und erwarb Western Airlines im September 1986 für 860 Millionen US-Dollar, um eine Streckenstruktur von Küste zu Küste und neue Drehkreuze in Salt Lake City und Los Angeles zu erhalten.

Der bereits beschriebene TWA-Ozark-Zusammenschluss führte zu einer solchen Sperre für St. Louis, dass drei Viertel aller Flugsteige kontrolliert wurden und in den Märkten, in denen keine Konkurrenz bestand, deutlich höhere Flugpreise festgestellt werden konnten.

Tatsächlich dienten diese Fusionen nur dazu, den schon fast unerbittlichen Griff eines Trägers an einer bestimmten Nabe zu festigen. Deregulation-spawned Empire, for instance-a rapidly-expanding New York State Fokker F.28 Fellowship operator-adopted a Syracuse hub and recorded an initial 1979 market share of just.75 percent, but this exponentially increased to 27.36 percent in 1985 when Piedmont acquired the growing regional. Two years later, its market share climbed to 39.82 percent. However, when USAir in turn purchased Piedmont, the Syracuse hub lock skyrocketed to over 61 percent.

Perhaps the most encompassing (and disjointed) merger was that between PEOPLExpress and Continental, which itself had already been the result of an amalgamation between the original, pre-deregulation Continental, Texas International, and New York Air. PEOPLExpress had equally already absorbed Denver-based Frontier. Texas Air, owner of the new conglomerate, also acquired Eastern, but retained its separate identity.

All these mergers, consummated during the latter half of 1986, unequivocally produced the "megacarrier."

"Deregulation's theme, echoing Darwinian philosophy, clearly demonstrated itself to be 'survival of the fittest,' which, for the airlines, translated as 'survival of the largest,' according to the Austrian Airlines Passenger Service Manual-JFK (p. 10). "If the long-established major carriers… wished to survive and maintain the markets they had so carefully nurtured during regulation, they would somehow have to implement a strategy which would ensure that they would remain 'large.'"

The major airlines' fundamental restructuring, beginning with monopoly and ending with megacarrier, constituted that strategy, as carriers tracing their origins to the infantile days of aviation and bearing names virtually synonymous with the industry fell like a string of acquisition-induced dominoes. By 1995 only seven US megacarriers remained, including American, Continental, Delta, Northwest, TWA, United, and USAir, along with two significant majors-America West and Southwest-a few "niche" airlines, and the regional-commuters which were almost exclusively aligned with one of the megacarriers or majors through code-share agreements.

Even these names disappeared early in the 21st century. Like brides and grooms walking down a monopoly-destined aisle, Delta married Northwest, United took Continental as its lawfully wedded, American joined arms with US Airways, and Southwest tied the knot with AirTran.

III. Conclusion

Although the examples set by Air California, PSA, and Southwest had indicated that a deregulated environment would ultimately prove to be mutually advantageous to both the operating airline and the passenger, these experiments failed to approximate actual conditions, since the rest of the US airline industry was still regulated and these fledgling airlines had therefore been insulated from major-carrier competition. Lacking the authority, cost structure, and equipment, they had been unable to launch comparable service of their own.

The initial proliferation of small, low-fare, no-frills, non-unionized deregulation-spawned, -bred, and -transformed airlines provided tremendous airline-, fare-, and service concept-choice only until the major carriers implemented their fundamental route system, aircraft, employment, computerized reservation system, and regional airline affiliation restructuring, reversing the expansion phase into one of buyout, merger, bankruptcy, retrenchment, consolidation, monopoly, and, ultimately, megacarrier. The upstarts, having lacked the majors' name recognition, financial strength, frequent flier marketing tools, and size, invariably succumbed, leaving most of the original dominant airlines, although in greatly modified form, until even these surrendered to prevailing forces. US airline deregulation had thus come full cycle.