The stages of deregulation of US airlines

I. The Regulation

Although it was originally thought that deregulation of US carriers would increase the number of carriers whose different service concepts, market segments, fleets and route structures would have created new competition, stimulated traffic and reduced fares, it ultimately reached a full cycle with only a virtual monopoly. There were three distinct stages in this evolution.

The regulation itself dates back to 1938, when Congress passed the Civil Aviation Act. The resultant, five-member Civil Aviation Council (CAB), formed two years later in 1940, regulated, among other functions, fares, permitted routes, subsidies and approved interline contracts.

"Regulation essentially replaces the decision of a market-based regulator," argue Elizabeth E. Bailey, David R. Graham, and Daniel P. Kaplan in their book "Deregulation of Airlines" (The MIT Press, 1985, p. 96).

When the environment was so regulated, it was in fact the case that the air carrier often had to use the purchase of another carrier to obtain route authorization. For example, Delta Air Lines, which has a long-standing interest in providing direct service to New York and Florida, has consistently filed claims with CAB. But the regulatory agency found that Northeast – a small local service provider that is often plagued by traffic, financial losses and bad weather due to its route system – needed the lucrative potential of the Florida route to bring it back to health and authorized it instead.

Without fear, Delta eventually decided to acquire a regional carrier and then on 24 April 1972 approved the merger. But these extremes would no longer be needed.

A glimpse into the future could already be in California and Texas. In the absence of local air transport jurisdiction, CAB would not be able to exercise its fares or routing rights with domestic carriers or their carriers, usually providing high frequency, one class and corrosion free service at half the price charged to regulated "backbone carriers". both profit and traffic growth were continuously recorded to charge.

For example, the Los Angeles-San Francisco market airlines Air California and PSA Pacific Southwest Airlines increased their annual traffic figures from 1.5 million passengers in 1960 to 3.2 million in 1965. Texas-based Southwest Airlines provided similarly low-cost flights to Dallas and Houston and other Texas destinations. These carriers have shown that real deregulation can provide benefits to middle-income travelers, offer a wider choice of flight and service concepts, and stimulate traffic.

In the mid-1970s, both passengers and government decided to abandon regulation, citing the examples of Air California, PSA, Southwest, and other multinational airlines as verifiable evidence that deregulation can bring mutual benefits to both airlines and travelers. At least it was a theory.

Ultimately, President Jimmy Carter, a signatory to the common sense and democratic government, signed a law on airline deregulation on October 28, 1978, eliminating the need for CAB approval for entry and exit and reducing most of the current fare restrictions. Even they will eventually be abolished when the Civil Aviation Authority, at its current famous sunset, was dissolved in 1985.

At the time of the event, 11 of the then-designated backbone carriers controlled 87.2 percent of the national revenue per mile (RPM), while 12 regional, 258 commuter, five additional and four intrastats offered RPM distribution balances. What would the sky still do if the dust of deregulation was in love?

II. Deregulation

Phase One: New Generation Airlines:

As airlines from California and Texas were introduced, an increasing number of unconventional, deregulation agents initially penetrated the US market. The first, Midway Airlines, was the first to be certified after the airline liberalization law was passed, and the first to actually take up the post in 1979.

Three years earlier, Irwing Tague, the former CEO of Hughes Airwest, founded. Midway launched a low-cost, high-frequency, non-corroded "Rainbow Jet" service from low-cost Midway Airport in Chicago in November this year. the city’s only airfield until the O&Jhare was built, and Midway hoped to revive in the same way as Southwest Dallas Love Field – five single-class, 86-passenger, formerly TWA DC-9-10, initially to Cleveland, Detroit and Kansas City. This low-fare structure facilitated rapid growth and hoped to strategically penetrate the Chicago market without attracting established airlines to rabbit competition.

However, after being recruited to Midways, the author can confirm that he learned three important lessons quickly, showing that he would need to remain enormously flexible to survive in a competitive market:

Although serving the second airport in the Chicago area, it competed above all on the Chicago market.

Secondly, as dominant carriers lowered fares, their load factors dropped.

Finally, a high-density, low-cost strategy, which had become a key feature in the early stages of deregulation, was ineffective when the airline tried to cater to a specific market segment, such as the higher-yielding business sector where convenience and service were expected.

As a result, Midway changed its strategy by adding a conservative cream tint; single-class, four-tier business cab seating with increased legroom; additional cabin baggage; and upgraded free wine in-flight services in exchange for higher than Rainbow Jet fares, but those that were still below the major carriers & # 39; unlimited bus rates.

The newly implemented strategy, called "Midway Metrolink", has significantly reduced the number of airplane seats. While the DC-9-10 and -30 had accommodated 86 and 115 passengers respectively, the new Metrolink strategy redefined them for only 60 and 84 passengers.

Apparently successful, it fueled explosive growth: from an initial 56,040 passengers in 1979 to nearly 1.2 million in 1983.

The initial rapid expansion was also experienced by Capitol Air, another deregulated carrier to which the author was a participant. Founded in 1946 as Capitol Airways, it had begun domestic charter flights with Curtiss C-46 Commandos and DC-4s, eventually acquiring larger L-049 constellations and by 1950 it became the fifth largest US airline after Overseas National (ONA). ), Trans International (TIA), and Universal. It acquired the first of what was to become one of the largest used Super Constellation fleets in January 1960, eventually operating 14 L-749, L-1049G and L-1049H for a period of 14 years from 1955 to 1968.

Transported by Capitol International Airways, the charter airline delivered its first pure jet DC-8-30 in September 1963 and then operated four versions of the McDonnell-Douglas design, including the -30, -50, – Series 61 and -63, which replaced the Lockheed constellation as a workhorse for the fleet.

Upon receiving the planned mandate in September 1978, Capitol opened the New York-Brussels route on 5 May the following year and the second Chicago / Boston-Brussels transatlantic sector on 19 June. Like PSA and Southwest, Capitol Air, a former incremental airline, was not regulated by CAB and therefore conducted its "deregulation experiment", sublimating one class of high-density, unrestricted and even standby charter economy to regular mile and profitability.

The planned concept, called "Sky Saver Service", consistently attracted overcapacity and significantly increased fleet and en route expansion. Operated by New York-JFK hub by 1982, six DC-8-61, five DC-8-63, and five DC-10-10 devices to seven US domestic, three Caribbean, and three European destinations attracted an ever-expanding passenger base: 611 400 passengers in 1980, 1,150,000 in 1981, and 1,824,000 in 1982.

Passengers unaware of the deregulation airlines, whose low fares could only be profitable with second-hand aircraft, dense seating and low-wage employees, often criticized Capitol Air's non-smoking policy and refusal to provide food. and hotel rooms in case of delays and compensation in the event of missed flights by other airlines. However, its ticket prices on the New York-Los Angeles market ranged from unlimited $ 149 round-trip to $ 189 one-way, while the majors' & # 39; unlimited tariffs in the market were hovering around the $ 450 mark. As a result, Capitol Air's load factor exceeded 90 percent.

By September 1981, ten new carriers had received certificates of release to service and a service had been opened.

"The first consequences of deregulation were dramatic," Anthony Sampson wrote in Empires of the Sky: World Airlines Politics, Competitions and Cartels (Random House, 1984, p. 136). "New types of airlines saw the opportunity to expand small businesses or set up high-speed airlines that could lower fares on local routes; they could give up big business superstructure and bureaucracy, and use their flexibility to hit giants to their weakest spots where they could quickly return."

Four types of aircraft emerged which had a significant initial impact on the traditionally regulated aircraft industry.

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

Others were local service providers maturing at the time of deregulation, including Allegheny, Frontier, Hughes Airwest, Central North, Ozark, Piedmont, Southern and Texas International, which quickly outperformed their former geographic concentration by regulation.

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

The fourth was charter amended by deregulation, such as Capitol Air, Trans International (later Transamerica) and World Airways.

While some of these carriers, in particular Air One and MGM Grand Air, targeted very specific niche markets in the provision of critical seating and services, the vast majority – whether deregulated by spawning, rearing or maturation – achieved profitability (or sought to achieve) including, of course, low, unlimited fares, single hub, short and medium range routing systems, high density seating, limited on-board service, lower-wage labor and mid-scale labor; medium-capacity tripods such as 727; and small-volume low power twin tips such as BAC-111, DC-9, 737, and F.28.

Everybody achieved a high load factor, generated tremendous traffic in existing and emerging markets, and created significant competition.

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

Phase Two: Monopoly:

While established, traditionally regulated, major carriers temporarily lowered fares in concentrated markets for selected high-deregulated carriers to maintain their passenger base, well-established and protected regulatory carriers were not built to operate profitably. Even in cases where they succeeded in removing competition from the market, yet another low tide of tide seemed to be waiting in the wings to fill the void.

As a result, incumbent carriers had to choose between giving up scarce markets or cutting funds to hold passengers until they went bankrupt themselves. It quickly became clear that the deregulation fare would become a permanent element of the "new" unregulated airline, and eventually the larger airlines discovered that they had to fundamentally restructure or surrender to new types of airline. Almost every aspect of their activities would change.

The first objective was the route system. These routing systems, which consisted of a traditionally offline service, which began with the CAB route authorizations in 1940 and 1950, did not in fact contain any intrinsic "system" and consisted of unbalanced geographical coverage resulting in lost revenue. other carriers and inefficient and inefficient use of existing fleets. What was really needed was a centralized "collection point" for self-assembly.

As a result of bilateral agreements, European airlines actually operated the first hubs, directing passengers from Copenhagen to Athens, for example, via an intermediate hub, such as Dusseldorf. All passengers flying into the Copenhagen-Düsseldorf or Athens-Düsseldorf sectors could theoretically switch to any of the airline's off-board aircraft spokes, significantly increasing the number of markets served. These hubs in the European capital also showed greater aircraft utilization, better traffic flow, a larger market base than traditional direct services based solely on originating and destination traffic could have supported and retention of connecting passengers.

"While travelers prefer frequent offline service, such a service can be quite expensive," said Bailey, Graham and Kaplan (p. 74). "Airlines thus face strong incentives to create air transport … By combining passengers of different origins and destinations, an airline can increase average passenger per flight and thereby reduce costs. In essence, larger-scale carriers take advantage of economies of scale on airplanes. more convenient service for travelers in less traveled markets. "

The first US hub dates back to the 1940s, when the southern government gave Delta some profitable long-distance routes in exchange for agreeing to serve several Atlanta communities.

"All of these routes became 'spokes' that led to the Atlanta Delta hub," said Peterson and Glab (p. 120). "There was a significant advantage in detaining passengers."

Allegheny, formerly a Pittsburgh-based local service provider with no distinctive long-distance development plan, registered significant progress on its eastern and mid-Atlantic route network, which had gradually "developed" due to southern Pennsylvania. By increasing the balance of its predominantly business and small public itinerary system with longer-term leisure destinations, it was able to further boost this development, and by 1978 it had 73 percent of its passengers in the Community. By 1981, the figure had risen to 89 percent, meaning that 89 percent of those flying to Philadelphia and Pittsburgh did not fly to Philadelphia and Pittsburgh.

Delta and Allegheny hubs were just the beginning of the phenomenon, as the concept helped more than create a concentration of airlines in a particular city. Instead, it led to a final monopolistic strangulation that ruled out any competition.

For example, at four major US hubs (Atlanta, Chicago-O & Hare, Dallas-Ft. Worth and Denver), "the two largest airlines have simply squeezed out or made it virtually impossible for other carriers to expand and gain market share," wrote Julius Maldutis in the 50 At a US airport after deregulation (Salomon Brothers, Inc., 1987, p. 4).

In Atlanta, where both Delta and Eastern sites were once hubs, any possibility of significant competition for third-party operators was eliminated. For example, in 1978, the percentage of Delta and East hub traffic was 49.65 and 39.17 percent, but nine years later, the figure had risen to 52.51 and 42.24 percent.

An analysis of the 50 largest airports (which accounted for 81.1 percent of US airline passengers' airworthiness) showed that only ten of these airports could be considered as less concentrated. On the other hand, 40 (or 80 percent) of the airports were too concentrated. The ten most concentrated airports had one airline with a market share of more than 66%.

St. In Louis, where both TWA and Ozark were hubs, the first had a market share of 39.06 percent, while the second had a market share of 20.21 percent in 1978. In 1986, the respective figures increased to 63.16 and 19.68 percent, respectively. The following year, after TWA acquired its only other significant competitor, Ozark, it sold its stake to 82.34 percent, with the remaining nine US domestic airlines sharing the remaining 17.66 percent. The airline's listing of all airlines operating between New York's three major airports on December 1, 1995, revealed 27 flights that day. None of them were operated by a carrier other than TWA! It was power.

Similarly, Piedmont, a ripe deregulation, which in 1977 only gained a 10.19% market share in Charlotte, North Carolina, decommissioned a monopoly of 87.87% ten years after it established a center there. The same transformation took place in Pittsburgh with Allegheny / USAir / US Airways – 43.65 percent in 1977 and 82.83 percent in 1987.

"Because a large portion of the market for urban couples cannot support convenient offline service, rhythm operations have proven to be the dominant strategy of airlines since deregulation," wrote Bailey, Graham and Kaplan (p. 196). "There has been a significant shift in the regulatory vision of linear systems and solar path eruptions."

In addition to the distribution concept, the main carriers underwent a number of other fundamental changes. For example, aircraft were reconfigured for higher density and, in some cases, single-class seating, while commercial cabins increased first-class and bus sections on selected routes; first class cabins were later completely replaced by business class cabins, following a trend launched by some niche airline deregulation carriers.

Fuel-efficient aircraft types were gradually replaced by new-generation designs, and daily use increased from 8.6 hours in 1971 to 10.3 hours in 1979. In the 1970s and early 1980s, the average size of aircraft in remote sectors increased, while in the late 1980s. In the early 1990s, clean jet technology penetrated every market for the first time, from 50 to 500 passengers between mainland continents.

Employment was also distorted. Robert Crandall, former chairman and chief executive of American Airlines, said "deregulation is deeply anti-labor … riches have been tremendously transferred from airline employees to air travelers."

Canceled airlines & # 39; the lowering of fares resulted in lower revenue and profit bases, which would allow funds to be redistributed to traditionally high wages and compensation packages, thus requiring increased labor productivity, cross-utilization, part-time work, joining and profit sharing. In some cases, employment was provided by contracted groundhandling companies to reduce the indemnity compensation. The author was involved in a groundhandling company's initial experiment at JFK International Airport between the triangular aviation services and Royal Jordanian Airlines.

"A relatively new but rapidly evolving concept provides service company employees on a contractual basis to a specific carrier who is suited to the career of an airport-based airline (Hicksville, New York, 1995, p. 9)." The service company then hires staff, runs training programs (if any) and hourly pay and benefits package. "

Wearing Jordan's royal uniform and performing all the ground-based functions, I often felt "centered" while trying to please the passenger as well as the airline. After all, they were both my clients, exposing the concept's intrinsic conflict.

Reduced airline salaries and allowances allow their origin to actually be traced back to Crandall, who developed an employment cost reduction scheme with a "B-scale" payment scheme that offered newly hired workers initially lower wages and required them to accumulate more longevity before they could. to achieve a higher A-level.

"The American (himself) was ready for huge growth and had a strong incentive to do so," said Peterson and Glab (p. 136). "The more it expanded, the more employees it would hire – with lower B-wages – and the more its average costs would go down."

According to Bailey, Graham and Kaplan, deregulation of an airline created financial and indemnity compensation above the industry standard. "It is now clear that inflexible rules of work and higher than competitive wages flourished during regulation. It appears that airline employees have benefited significantly from the CAB defensive regulation." (page 197)

Another need for deregulation was the increasing reliance on automation. American Airlines, again under the leadership of Crandall, created the first computerized airline booking system, SABER, immediately followed by the American Apollo System. As powerful sales tools, these automated systems were bought by travel agents, who paid the owners different fees for each booking they made, while smaller carriers had to negotiate representation.

These systems became so complex and complex that their information was gradually sublimated through every aspect of the airline, using their "booking modes", providing bookings, itineraries, fares, hotel, travel and land transportation reservations, often flight tracking and ticketing; their exit control systems (DCS) providing passenger registration and boarding passes; and their "Control Modes", using this information to produce aircraft weight and balance and load plan and loading list.

Only through these sophisticated airline reservation systems did carriers manage to implement yield management programs, that is, to determine the optimal balance between low fares and profitable high fares based on seasonality, departure and demand. , comfort, capacity and competition for a profitable flight. For example, on December 1, 1995, an airline booking system consultancy listed 27 separate fares between New York and Los Angeles, that is, through American Airlines, from unlimited $ 1 741.82 one-way fares to $ 226.36 limited return flights. trainer fare. The codes in the "Price Base" column, such as "KPE7HOLN", were accessed to expose the limitations of each – the printout spanned multiple pages!

Another major change in the deregulated industry was the structure and relationship of both regional and commuter migrants to the majors. Because of the sometimes cyclical nature of the history, local service carriers once abandoned small communities on low density routes, once again acquiring a clean jet, but now with two major differences:. Today 's regional areas were never limited by these routes to the regulation, and. Although their own airplanes expanded rapidly, they sought to coexist with major companies in code-sharing agreements, rather than compete where their planes were in high resemblance and their flights carried an affiliate. s two-letter codes.

Of the 300 destinations served by Delta in the second half of 1995, for example, 85 of those 85 reached one of its four Delta Connection code distributors, including Atlantic Southeast Airlines (ASA), Business Express, Comair, and Skywest only – the first of which had to procure equipment with a clean jet engine at that time. American externally bought its shuttle trains and jointly called them "American Eagle".

However, the main carriers are & # 39; deregulation-related restructuring was complete.

When TWA matched Capitol Air with unrestricted intercontinental bus fares, the former additional 30 passengers booked their DC-8-61 aircraft, which would otherwise accommodate 252, and canceled their flights. In a similar situation, the Buffalo-Newark market, between August 1981 and June 1982, analyzed the established and rising PEOPLExpress load factors in the United States, which consistently reported those that were at least 20 points lower.

"Data suggests that many consumers have opted for travel with a greater degree of name recognition and convenience at the same price," continued Bailey, Graham, and Kaplan (p. 106).

Competition eventually forced Capitol Air to adjust its route system to cover an increasing number of ethnic and low-served markets, until the majors also penetrated the area and the carrier had no choice but to apply for Chapter 11 bankruptcy protection by winding down. November 25, 1984.

Midway faced opposition from major carriers. Whatever the strategy they used to determine their optimal niche, they were always aggressive against major companies. For example, when it acquired Air Florida in 1984, it configured its planes with two class seats, but as it traveled on both sides of the belt, it soon returned to the single class concept and again in November 1989 to the two class class. one, by then, operated an 82-member fleet with its "Midway Connection" and carried 5.2 million passengers a year.

But excessive expansion and the attempt to replace Philadelphia's hub in the East during a poor financial year in direct competition with the United States led to its death two years later, on November 13.

"While these numerous strategies pointed to a constant reassessment of their proper course, they also indicated market instability in deregulated airspace and the airline's determination to stay within them, Hicksville, New York, 1991, p. 59).

Capitol Air and Midway were just two examples of deregulated maturity carriers that surrendered to radically restructured major companies. Indeed, at the end of 1995, only one of the 100 airlines certified after the airline deregulation law was operating – America West.

"(The major airlines) implemented a strategy whereby they could beat their fare competition by expanding and applying comparable fares aggressively, despite the heavy losses on certain routes, all in order to maintain – or in some cases – regain market share. Larger airlines grew powerful and monopolistic, losing competition wherever it appeared, "said the Austrian Airlines Handbook of Passenger Handling (Hicksville, New York, 1990, pp. 10-11).

Step Three: Megacarrier:

The expansion of the airline as it began to move seemed self-propelled and resisted inertia. By definition, monopolies have no borders. The next logical step was to penetrate the foreign market.

In contrast to domestic US growth, "it was much more difficult for a US carrier to gain access to a new foreign market than a new domestic one because international air services were still strictly governed by bilateral agreements between US and foreign governments," wrote Peterson and Glab (p. 283). "… In order to obtain immediate foreign operation, a US airline had to purchase the route administration from another US airline."

We recall that this phenomenon was a virtual replication of US internal governance before deregulation. In the latter case, such a purchase would normally only be made if the airline owning the airline was in financial difficulty and if the revenue generated by the sales revenue remained viable.

Pan Am, particularly affected by the effects of deregulation, was forced to sell its lucrative Pacific division, along with aircraft and ground facilities, to United for $ 750 million to stay afloat. United, already a large financially sound airline at the time, now had a worldwide route network with decent domestic bait.

More important than sales, however, was its far-reaching impact. "United Airlines ostis Pan Am & # 39; i Vaikse ookeani divisjoni eesmärgiga saavutada doominoefekt," jätkasid Peterson ja Glab (lk 148). "Paljud lennuettevõtjad olid ärevuses uue konkurentsi ees, eriti nende loodeosas, mis oli vastu riigi suurim lennufirma, mis liigub oma Vaikse ookeani turbale. Loode teadis, et tal on vaja märkimisväärselt suuremat omamaist kodumaist võrku ja kiireim viis selle saamiseks on ühinemise teel. "

1986. aasta lõpuks oli ta just seda teinud, omandades vabariigi, mis ise oli moodustatud Põhja-Lõuna-Lõuna ühinemisest 1979. aastal ja Hughes Airwesti teisest omandamisest 1980. aastal, ning strateegia autasustas Loodet monopoolse staatusega kõigis selle sõlmpunktides. , näiteks Minneapolis, turuosaga 81,55 protsenti.

Delta, fearing it would be unable to compete with airlines of such magnitude, acquired Western Airlines for $860 million in September of 1986, in the process obtaining a coast-to-coast route structure and new hubs in Salt Lake City and Los Angeles.

The already described TWA-Ozark merger produced such a lock on St. Louis that it controlled three-quarters of all gates and was able to assess much higher fares in those markets where there was no competition.

In fact, these mergers only served to tighten a carrier's already almost unrelenting grip 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'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.