airlines are all large firms, that is how they can be considered a major airline. Although each airline may service varying destinations and offer different amenities, when boiled down to their simplest, the product they all offer is passenger transportation via flight. Lynch 2
RUNNING HEAD: OLIGOPOLIES AND AIRLINES; ONE IN THE SAME?Of course, none of this is possible without first surpassing of the FAA and DOT regulations associated with attempting to enter the airline industry. According to the DOT, “anyone who wants to provide air transportation service as an air carrier must first obtain two separate authorizations form the DOT” (U.S. Air Carriers, 2012). Those authorizations are an economic authority from the office of the secretary of transportation as well as an air carrier certificate and operations specifications from the FAA. There are very lengthy and difficult processes put in place to obtain both of these authorizations, which makes entering the air carrierindustry quite difficult, time consuming and costly. Economic Impact on AirlinesPrior to the Airline Deregulation Act of 1978 the Civil Aeronautics Board was responsible for managing domestic air travel in the United States. CAB, was primarily responsible for all aspects of the US air travel industry including schedules, fares and routes. After deregulation, airlines were afforded the right to create their own schedules, fares and routesand eventually fell under the regulation of the FAA. The hope of doing so was to allow more competition in to the market, lower the cost of fares and expand the industry. For some time, this worked, smaller airlines such as Southwest Airlines were able to enter the industry and thrive, driving down fares and expanding the US air travel industry.
You've reached the end of your free preview.
Want to read all 5 pages?
- Fall '16
- Kelly Lawton