American Airlines Deregulation Phase

I. Regulations

Although it was originally envisaged that the deregulation of American airlines would result in more and more airlines, their different service concepts, market segmentation, fleet and route structure will bring new competition, stimulate traffic and reduce fares, but Eventually entered the entire cycle, which eventually led to a virtual monopoly. Three different stages occurred during its evolution.

The law itself dates back to the time when Congress passed the Civil Aviation Act in 1938. The resulting CAB was established two years later in 1940 and was responsible for supervising fares, authorizing routes, granting subsidies, and approving intermodal agreements.

Elizabeth E. Bailey, David R. Graham, and Daniel P. Kaplan in their book Deregulated Airlines: "By definition, regulation replaces market regulation." (MIT Press , 1985, p. 96).

In fact, the environment is so tightly regulated that airlines often have to buy another airline in order to obtain authorization for their routes. For example, Delta Air Lines, which has long been interested in providing direct flights between New York and Florida, has petitioned the Civil Aviation Authority (CAB). However, the regulator believes that Northeast Airlines, a small operator in the Northeast region, is often plagued by low traffic flow, economic losses and bad weather due to its route system, so the revenue potential of the lucrative Florida route is needed to restore it to health and With approval it is authoritative.

With no fear, Delta Air Lines turned to the regional airlines for acquisition, which was later approved for merger on April 24, 1972. But soon these extreme conditions will no longer be needed.

California and Texas already have an understanding of the future. Because it has no jurisdiction over local air transportation, CAB can neither exercise fares for state airlines nor exercise route authorizations for state airlines, and these carriers usually provide high-frequency, single-cabin, effortless services , But prices are only half that of regulated "mainline" airlines, which continue to record profit and traffic growth.

For example, the annual passenger flow of California Airlines and PSA Pacific Southwest Airlines operating in the Los Angeles-San Francisco market increased from 1.5 million passengers in 1960 to 3.2 million in 1965. Southwest Airlines in Texas waits for Texas in Dallas and Houston. These airlines have demonstrated that true deregulation may provide fares for ordinary income passengers, provide more choices for airlines and services, and stimulate traffic.

In the mid-1970s, passengers and the government increasingly condemned regulation and cited examples set by California Airlines, PSA, Southwest Airlines, and other state airlines, demonstrating that deregulation could create mutually beneficial airlines and passengers. At least that's the theory.

In the end, President Jimmy Carter finally acknowledged rationality and democratic rule, and signed the Aviation Deregulation Act on October 28, 1978. This process eliminated the need for the CAB to authorize entry and exit routes and reduced the current Some fares are restricted. In 1985, the then-known "Sunset" Civil Aviation Council was dissolved, and even those will eventually be eliminated.

At the time of the event, the 11 "passenger" airlines designated at the time collectively controlled 87.2% of domestic revenue passenger miles (RPM), while 12 regions, 258 commuters, 5 supplementary states and 4 states provided in-house This leaves room for RPM allocation. After the deregulated dust settles, who will overwhelm the sky?

two. Deregulation

Phase 1: New generation airlines:

Like in-state airlines in California and Texas, an increasing number of non-traditional, deregulated derivative airlines have initially penetrated the US market. The first of these was Midway Airlines, which was the first airline to be certified after the passage of the Aviation Deregulation Act and was the first airline to actually launch the service in 1979.

Established three years ago by former Hughes Airwest executive Irwing Tague, Midway Airlines opened a low-cost, high-frequency, cheap "Rainbow Jet" in November of that year from Chicago ’s underutilized Midway Airport Machine "service. The city was the only airport until the completion of Hare, and Midway Airlines wanted to be resurrected by Southwest Airlines at Dallas & # 39; s Love Field-with five single cabins, The former TWA DC, which accommodates 86 people, was 9 to 10 seconds and initially arrived in Cleveland, Detroit, and Kansas City. Its low fare structure promotes rapid growth and strategically hopes to break into the Chicago market without attracting O & Hare competition from existing carriers.

However, with the help of Midway, the author can prove that it has learned three important lessons quickly, which shows that it must maintain great flexibility to survive in the current competitive market conditions:

Although it served the secondary airports in the Chicago area, it still competed in the Chicago market first.

Second, once existing airlines reduce their fares, their load factor will drop.

Finally, when airlines try to cater to specific market segments (such as high-yield business), high-density, low-fare strategies have become the main feature of the upstarts resulting from deregulation, but this strategy has no effect. , Comfort is higher, service is expected.

As a result, Midway modified its strategy by introducing a conservative beige finish. Single-seat, four-seat business class seats, increased legroom; additional carry-on luggage space; and upgraded free on-board alcohol service in exchange for fares higher than Rainbow Jet, but still lower than major airlines Fare. Unlimited bus tariffs.

The newly implemented strategy is called "Midway Metrolink", which has greatly reduced the number of seats per aircraft. For example, their DC-9-10 and -30 can accommodate 86 and 115 passengers, respectively, but under the new Metrolink strategy, they have only been reconfigured to 60 and 84 passengers.

From the initial 56,040 passengers in 1979 to nearly 1.2 million in 1983, this was clearly a success, and it sparked explosive growth.

Capitol Air, another deregulated and transitional airline, is also involved by the author, and has also experienced rapid initial expansion. It was founded in 1946. It was originally Capitol and started domestic charter services with Curtiss C-46 commando and DC-4. It finally gained the larger constellation L-049 and became second only to it in 1950. World Air, Fifth Largest Supplementary Airline for Overseas National Airlines (ONA), Trans International (TIA) and Universal. In January 1960, it acquired one of the largest used Super Constellation fleets, and during the 14 years from 1955 to 1968, it eventually operated 17 L-749, L-1049G, and L-1049H.

Chartered Airline was renamed Capitol International Airways and delivered the first pure jet aircraft, the DC-8-30, in September 1963, followed by four McDonald-Douglas designs Versions, including the -30, -50, -61, and -63 series, replaced the Lockheed Constellation as the main force of its fleet.

After the Capitol was scheduled to authorize in September 1978, the New York-Brussels route was opened on May 5, and the second Chicago / Boston-Brussels transatlantic route was opened on June 19. Like PSA and Southwest Airlines, Capitol was previously a supplementary airline and was not regulated by the CAB, so it carried out by sublimating the proven charter economy of single-cabin, high-density, low-unlimited, and even standby fares to scheduled services Your own "alternative experiment" to achieve low agent costs and profitability.

The reservation concept, branded "Sky Saver Service", has consistently attracted demand for more than capacity and has led to considerable expansion of the fleet and airline system. By 1982, the company had operated 6 DC-8-61, 5 DC-8-63, and 5 DC-10-10 from the hub of the New York-JFK International Airport, flying to New York and JFK International Airport respectively. Seven U.S. domestic, three Caribbean and three European destinations. Number of passengers: 611,400 in 1980, 1,150,000 in 1981, and 1,824,000 in 1982.

Passengers are unaware of carriers with low regulated fares, and their low fares can only be profitable through the use of second-hand aircraft, high-density seats, and lower-paid unemployed employees, and therefore often criticize Capitol ’s non-intermodal policies and refuse to provide meal SHI expressed criticism and delays in hotel rooms, as well as compensation received for missing connections from other airlines. Nonetheless, its fares in the New York-Los Angeles market range from an unrestricted $ 149 round trip to $ 189 one way, while professional rates are $ 189. Unrestricted tariffs on the market are hovering around the $ 450 mark. As a result, the load factor of the Capitol exceeded 90%.

By September 1981, ten new aircraft carriers had obtained operating certificates and were put into use.

"The original role of deregulation was dramatic," wrote Anthony Sampson in Sky Empire: Politics, Races, and Cartels of the World Airlines (Random House, 1984, p. 136). "" The new generation of aviation entrepreneurs sees opportunities to expand small companies or establish instant airlines, which may weaken fares on local routes; they can save most of the superstructure and bureaucracy of large airlines and can take advantage of Their flexibility hits the giants at their weakest moments, allowing them to reap the rewards quickly. "

Four types of airlines have emerged that have had a significant initial impact on the traditionally regulated airline industry.

The first is deregulated upstarts, such as Atlanta Airlines, Florida Airlines, Air One, Altair, US West, Best, Carnival, Empire, Florida Express, Frontier Horizon, Jet America, Midway, Midwest Express, MGM Grand Air , Morris Airlines, Muse Airlines, New York Airlines, Northeast International, Pacific Eastern Airlines, Pacific Express, PEOPLExpress, Presidential Palace, Reno Airlines, SunJet International, Hawaiian Express and ValuJet.

The second category is deregulated local service providers, including Allegheny, Frontier, Hughes Airlines, North Central, Ozark, Piedmont, South and Texas International, and they quickly overtook them. Previous geographic concentration imposed by regulations.

Third interstate airlines include California Airlines (later AirCal), Alaska, Aloha, Hawaiian Airlines, PSA, Southwest Airlines and Vienna Airlines Alaska.

The fourth category is deregulated charters such as Capitol Air, Trans International (later Transamerica) and World Airways.

Although some of these carriers, especially Air One and MGM Grand Air, target very specific market segments by providing premium seats and services, the vast majority (whether generated through deregulated parenting methods, improvements or maturity) , You can monetize (or try to achieve). Means of several core operating characteristics, including low-cost, unlimited fares, single hubs, short- and medium-distance route systems, high-density seats, limited in-flight services, lower-paid non-union workers, and mid-range, medium-capacity Jets (such as 727) and short-range low-capacity dual jets (such as BAC-111, DC-9, 737, and F.28).

All of these have achieved high load rates, generated huge traffic in existing and emerging markets, and generated considerable competition.

"In this regard," Barbara Sturken Peterson and James Glab in their book, "Fast descent: deregulation and escape from aviation," (Simon and Schuster, 1994, p. 307) wrote, "Deauthorization is like a charm."

Second stage: Monopoly:

Although established, traditionally regulated major carriers have temporarily reduced fares in some highly deregulated airline concentration markets to retain their passenger base, but established airlines that have long been regulated and protected by regulations have not Organize for their profitable operations. However, even as they manage to eliminate market competition, another low-price upstart seems to be waiting to fill the gap.

As a result, existing carriers face the option of choosing to abandon hard-growing markets or reduce financial resources to retain passengers until they go bankrupt themselves. It quickly became apparent that deregulated fare reductions would become a permanent element of the "new" unregulated aviation industry, and major airlines eventually found that they had to radically restructure themselves or succumb to new airlines. Ultimately, almost every aspect of their operations will change.

The first aspect addressed is the routing system. Traditionally made up of point-to-point, uninterrupted services, originating from the CAB route authorizations of 1940 and 1950, these route systems did not actually contain any inherent "systems" at all, and consisted of unbalanced geographic areas, leading to revenue loss. Inefficient and uneconomical use by other carriers and existing fleets. What is really needed is a centralized "collection point" for self-sufficiency.

Thanks to a bilateral agreement, European carriers actually operated the first "junction", guiding passengers from Copenhagen to Athens via intermediate connection points such as Dusseldorf. Theoretically, any passenger traveling on Copenhagen-Dusseldorf Airport or Athens-Dusseldorf Airport can be transferred to any outwardly radiating spokes of the airline, thereby greatly increasing the market served quantity. These European capital hubs also demonstrate increased aircraft utilization, improved traffic flow, a larger market base than traditional point-to-point services that rely solely on origins and destinations, and maintaining transit passengers.

According to Bailey, Graham and Kaplan, "Although passengers prefer frequent uninterrupted services, the cost of such services can be high" (p. 74). "Airlines are therefore faced with a strong incentive to establish spoke-and-spoke operations … By combining passengers with different origins and destinations, airlines can increase the average number of passengers per flight, thereby reducing costs. Essentially, broader The range of operations allows airlines to take advantage of the economies of scale of aircraft. At the same time, spoke-type operations provide passengers with more convenient services in markets with less travel. "

The first U.S. hub was built in the 1940s when the government awarded Delta Airways some lucrative long-distance routes to develop the southern region in exchange for its agreement to serve several small communities in Atlanta.

"All of these routes became spokes to the center of the Atlanta Delta," Peterson and Graber said (p. 120). "What follows is a significant advantage in retaining passengers."

Allegheny was previously a local service company in Pittsburgh and did not have a unique long-range development plan, but has achieved considerable success on its eastern and central Atlantic interstate route network, which has gradually grown due to the funnel point in Pennsylvania "development of". It expanded the balance between the main business and the small community route system, with a wider range of routes and destinations oriented towards leisure destinations, further facilitated this development. By 1978, 73% of its passengers reached the level of connectivity . By 1981, that number had risen to 89%, meaning that 89% of those flying to Philadelphia and Pittsburgh did not fly to Philadelphia and Pittsburgh.

The Delta and Allegheny hubs are just the beginning of this phenomenon, as the concept works more than concentrating airlines in a particular city. Instead, it led to the eventual monopoly strangulation, which prevented any competition.

For example, at the four major hub airports in the United States (Atlanta, Chicago O'Hare, Dallas-Fort Worth, and Denver), "the two largest airlines are just crowding out or actually preventing other airlines from expanding the market and Gain market share, "Julius Maldutis wrote in the airline competition at the 50 largest US airports since deregulation (Salomon Brothers, 1987, p. 4).

Atlanta, which once had a hub in Atlanta (Delta and Eastern), eliminates the possibility of any major third carrier competition. For example, in 1978, the delta and eastern hub traffic percentages were 49.65% and 39.17%, respectively, and after nine years, these numbers increased to 52.51 and 42.24%.

An analysis of the 50 largest airports (81.1% of U.S. regular passenger aircraft) shows that only ten of these airports are considered less highly concentrated. On the other hand, 40 (or 80%) airports are too concentrated. The ten most concentrated airports have an airline with a passenger aircraft market share of over 66%.

In St. Louis, TWA and Ozark are both hubs of hub operations, with the former having a 39.06% market share and the latter having a 20.21% share in 1978. In 1986, the corresponding figures increased to 63.16 and 19.68%, respectively. The following year, after TWA acquired its only major competitor, Ozark, it increased that share to 82.34%, while the other nine US domestic airlines shared the remaining 17.66%. The computer list of an airline reflects all carriers operating between the three major New York airports and Louis on December 1, 1995, and this day of the flight revealed 27 flights. No carrier other than TWA is operated by the carrier! This is power.

Similarly, the deregulated Piedmont occupied only 10.19% of the market share in Charlotte, North Carolina in 1977. After establishing a hub there ten years later, it monopolized it to a monopoly position of 87.87%. . The same changes happened in Pittsburgh, with Allegheny / USAir / US Airways accounting for 43.65% in 1977 and 82.83% in 1987.

Bailey, Graham and Kaplan write: "Since most cities cannot support convenient direct flights to the market, spoke-and-trade has become a major strategy for airlines since deregulation," p.196. "There has been a major shift from the regulatory vision of the linear system to the rising sun."

In addition to the hub concept, major carriers have experienced several other fundamental changes. For example, the aircraft has been reconfigured to make it more dense, with single-cabin seating in some cases, while business class has added first- and long-haul cabins to selected routes. Later, as some special niche deregulated airlines triggered a trend that followed the trend, first class was completely replaced by business class.

Fuel-efficient aircraft types are gradually being replaced by new-generation designs, with daily usage increasing from 8.6 hours in 1971 to 10.3 hours in 1979. In the 1970s and early 1980s, the average aircraft size of long-range aircraft increased, and in all categories the size of the 1980s increased. In the early 1990s, pure jet technology penetrated all markets for the first time, from areas with more than 50 people to intercontinentals with more than 500 people.

Employment has also changed. Robert Crandall, a former chairman and CEO of American Airlines, said, "Decentralization is an anti-labor, … wealth has been transferred from airline employees to airline passengers."

Reduced fares of deregulated airlines will reduce the income and profit base, from which funds can be redistributed to traditionally higher employment wages and benefits, thereby increasing employee productivity, cross-use, part-time, non-union, profit sharing Measures. In some cases, contract ground services companies have actually provided employment to reduce benefits compensation. The authors participated in the first ground services company experiment between JV and Royal Jordanian Airlines at JFK.

"Service-based companies are a relatively new but rapidly developing concept, according to the airport-based airline career profile (Hicksville, NY, (1995, p. 9)." Service companies subsequently hired personnel, Conduct training programs, if any, and determine hourly wages and benefits. "

After wearing Jordan's royal uniform and providing all ground combat functions, I often felt "trapped" while trying to please passengers and airlines. After all, they are all my clients, revealing the conflict inherent in the concept.

The reduced airline employment wages and benefits actually originated from Crandall himself, who developed a plan to reduce hiring costs with a "B" payment plan that initially offered lower salaries to newly hired employees and required They accumulate to longer life. Reach a higher "A" level.

Peterson and Grab (p. 136) said: "Americans (in themselves) are bound to increase significantly and have a great incentive to do so." "The more it expands, the more workers it will hire. -Pay at lower B-salaries-the more the average cost falls. "

According to Bailey, Graham and Kaplan, in their work, "relaxed the regulation of airlines", which created monetary and welfare compensation that exceeded industry standards. "It is now clear that rigid work rules and above-competitive salaries have flourished during the regulatory process. Airline employees appear to have benefited from CAB's protective regulations." (P. 197)

Another necessary condition for deregulation is the growing reliance on automation. American Airlines, again led by Crandall, created the first computerized air reservation system, SABER, followed closely by the American Apollo System. As a powerful sales tool, travel agencies bought these automated systems, travel agencies paid the owner different fees for each booking, and smaller carriers had to negotiate representation.

These systems are so complex and multifaceted that their information is gradually sublimated through all aspects of airlines, and its "booking model" provides bookings, itineraries, fares, hotels, travel and ground transportation bookings, frequent flyer miles tracking And ticketing; their "Departure Control System" (DCS) provides passenger check-in and issuance of boarding passes; and their "controller mode", which is used for aircraft weight and balance and load planning and loading Table generation.

Only through these complex airline booking systems can carriers implement "yield management" procedures, which determine the best balance between low-cost tickets that attract passengers and high-price tickets that generate profits based on seasonality, departure time, and demand. , Convenience, capacity and competition to ultimately produce profitable flights. For example, an airline reservation system consulting company listed 27 separate fares between December 1, 1995 and American Airlines between New York and Los Angeles, ranging from unlimited one-way first-class fares to $ 1,741.82 Coach fare to the height limit of $ 226.36. Access codes in the "Fare Basis" column, such as "KPE7HOLN", to show the restrictions attached to each code-printouts span several pages!

Another fundamental change in the deregulated industry is the structure and relationships of regional and commuter airlines with professionalism. Because history is sometimes cyclical, local airlines once showed a model of abandoning small communities and low-density routes. When they bought pure jets again, this happened again, but now there are two main differences: ( 1). According to regulations, today's regions are never restricted to these routes, and (2). Although they quickly increased their pure jet fleet, they tried to co-exist with professionals instead of competing with them through a code-sharing agreement in which the aircraft appeared on a large fleet-like aircraft, and Affiliated airlines are carried on the flight. Two-letter code.

For example, in the second half of 1995, of the 300 destinations served by Delta, 85 of them were actually reached by one of its four Delta Connection code-sharing airlines, including Atlantic Southeast Airlines ( (ASA), Business Express, Comair, and Skywest, which were the first companies to buy pure jet equipment at the time. American Airlines purchased its own commuter airlines and referred to them collectively as the "American Eagle."

However, the deregulation of the major carriers has been completed.

When the TWA matched Capitol Air's unlimited intercontinental bus fares, the former supplement recorded 30 passenger reservations on DC-8-61, otherwise it could accommodate 252 and canceled its flight. In a similar situation, between August 1981 and June 1982, when the load factors of the established USAir and upstart PEOPLExpress were analyzed on the Buffalo-Newark market, the latter consistently reported at least 20 points .

Bailey, Graham and Kaplan went on to say, "So the data shows that, for the same fare, many consumers choose to travel on an airline with higher name recognition and convenience." (P. 106) )

The competition eventually forced Capitol Airways to readjust its routing system to include an increasing number of ethnic markets and underserved markets until major airlines also eroded the territory. The airline had no choice but to apply for Chapter 11. Bankruptcy protection, ceased operations November 25, 1984.

Midway Island also faces opposition from major aircraft carriers. Indeed, no matter what strategy you use to define your best niche market, it will always be opposed by aggressive professionals. For example, when Florida Airlines was acquired in 1984, it reconfigured a two-seat aircraft, but riding on both sides of the seesaw quickly returned to the concept of a single seat, and in November 1989 it switched to a two-seater concept again. At the time, it operated an 82-person fleet of Midway Connection, carrying 5.2 million passengers a year.

However, excessive expansion and direct competition with American aviation during the economic downturn, trying to replace Eastern Airlines at the Philadelphia hub, led to its demise on November 13 two years later.

"While these numerous strategies indicate a constant re-evaluation of their routes, they also show that market conditions are unstable in a deregulated sky and that airlines are determined to stay in it, with the flexibility of concurrent service concepts, cabin configuration, seats Density and Marketing Strategies ", according to McDonnell-Douglas DC-9 (Hicksville, NY, 1991, p. 59).

Capitol Air and Midway are just two examples of professional, deregulated airlines succumbing to a radical restructuring. In fact, about 100 airlines have been certified since the passage of the Aviation Deregulation Act, and only at the end of 1995 did an airline in the western Americas still operate.

"(The major airlines) have implemented a strategy that they can still beat the low-price competition in their games by aggressively expanding and charging comparable fares despite some routes losing a lot of money, all for the sake of Maintain or, in some cases, to regain market share …. According to the Austrian Airlines Passenger Handbook-Kennedy International Airport (Hicksville, New York, 1990, pages 10-11), major airlines have adopted Eliminate competition everywhere and become strong and monopolistic.

The third stage: giant aircraft carrier:

Once the airline's expansion started, it appeared to be advancing and resisting inertia. By definition, monopolies have no boundaries. The next logical step is the penetration of foreign markets.

However, unlike domestic growth, "For American airlines, entering new foreign markets is much more difficult than entering new domestic markets because international air services are still heavily regulated by bilateral agreements between the U.S. and foreign governments ", Wrote by Peterson and Glab (p. 283). "… In order to win direct operating rights to a foreign country, American Airlines must purchase a route authorization from another American airline."

One will remember that this phenomenon was actually a duplication of the structure of the US domestic government before deregulation. In the latter case, such purchases are usually approved only if the airline authorized by the route has financial difficulties and needs to generate revenue from sales to continue to exist.

Pan American Airlines, particularly hit hard by deregulation, was forced to sell its lucrative Pacific branch and aircraft and ground facilities to Manchester United for $ 750 million to maintain operations. Manchester United Airlines was originally a large, financially sound airline but now has a global network of routes with appropriate domestic feed.

But more important than the sale is its far-reaching impact. Peterson and Glab (p. 148) went on to say, "United Airlines acquired the Pan American Pacific Branch with the intent of causing a domino effect. Many airlines are shocked by the new competition they face, and Northwest Airlines in particular, who are opposed Northwest knows it needs a bigger domestic network, and the fastest way is through mergers.

By the end of 1986, it had achieved this by acquiring the Republic, which was itself formed by the merger of the North Central and the South in 1979 and the second acquisition by Hughes Airwest in 1980, a strategy that uses all of its The hub's monopoly position rewarded the Northwest, such as Minneapolis, with a market share of 81.55%.

Worrying that it would not be able to compete with an airline of this size, Delta Air Lines acquired Western Airlines in September 1986 for $ 860 million, gaining a coast-to-coast route structure and new hubs in Salt Lake City and Los Angeles.

The TWA-Ozark merger that has been described has created such a big lock on St. Louis that it controls three-quarters of all gates and is able to evaluate higher fares in those markets where there is no competition.

In fact, these mergers can only make the carrier almost indomitable on a particular hub. 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 & # 39; s theme, echoing Darwinian philosophy, clearly demonstrated itself to be & # 39; survival of the fittest, & # 39; which, for the airlines, translated as & # 39; survival of the largest, & # 39 ; 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 & # 39; large. & # 39; "

The major airlines & # 39; 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.