Flying Doesn’t Have to Be This Miserable

But in 1978, in the name of reducing the government’s hand in the airline industry, Congress passed the Airline Deregulation Act, with the goal of injecting more competition into the air travel business. The theory sounded great: deregulate the airline industry, and the free market will make everything better. There will be dozens, perhaps even hundreds of new airlines. There will be more competition, lower prices, and no downsides for small communities, workers, or passengers. For a few years, this prediction even appeared to come true, but pretty quickly, the fundamental dynamics of the airline industry came roaring back. 

Scale matters in the airline industry. Big airlines started undercutting small rivals, pushing them into financial crisis and bankruptcy. The big airlines then snapped them up, consolidating the industry more and more. Big airlines shifted toward hub-and-spokes systems, even creating “fortress hubs” where competition is minimal.