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Airline deregulation and public policy.

S A Morrison, C Winston

Science (New York, N.Y.)

|August 18, 1989

Summary

Airline deregulation generated $14.9 billion in annual benefits for travelers and carriers. Addressing policy failures in areas like airport congestion and safety could further enhance these gains.

Area of Science:

Economics
Transportation Policy
Industry Analysis

Background:

Airline deregulation aimed to increase competition and efficiency in the air travel industry.
Previous assessments have highlighted both benefits and drawbacks of the deregulation policy.

Purpose of the Study:

To assess the economic impact of airline deregulation on travelers and carriers.
To analyze the effects of deregulation on airport congestion, safety, bankruptcy, and mergers.
To identify policy recommendations for maximizing deregulation benefits.

Main Methods:

Economic impact assessment using 1988 dollar values.
Analysis of secondary effects including airport congestion, safety, and industry consolidation.
Policy analysis to identify government's role in mitigating negative externalities.

Related Experiment Videos

Main Results:

Deregulation yielded approximately $14.9 billion in annual benefits (1988 dollars) for travelers and carriers.
Airport congestion, safety concerns, airline bankruptcies, and mergers have, in some cases, reduced these benefits.
Observed negative impacts are largely attributable to policy failures rather than deregulation itself.

Conclusions:

Airline deregulation has provided substantial economic benefits.
Government policy failures, not deregulation per se, caused associated costs.
Implementing policies for competition and efficient airport use can amplify deregulation's advantages and guide other industries.