The Final Verdict
Was Deregulation a Success?
Forty-six years on, the evidence is in. But the verdict depends entirely on who you ask — and what you think flying is for.
fall in real airfares since 1978
increase in passenger numbers
airlines dominating the market
The Case For
- Average real airfares have fallen by 44% — a transformative reduction that opened flying to millions who could never have afforded it under regulation.
- Passenger numbers have tripled. Flying is no longer a luxury for the wealthy — it is a routine part of American life.
- Route networks expanded dramatically. More city pairs are served today than at any point in aviation history.
- Low-cost carriers — Southwest, JetBlue, Spirit — would not exist under the old regulatory framework. Their competition has kept pressure on the majors.
- The Essential Air Service programme has protected basic connectivity for small and remote communities.
The Case Against
- Consolidation has produced an oligopoly. Four airlines control over 80% of the domestic market — a level of concentration that would have been unacceptable to the original architects of deregulation.
- Service quality has deteriorated markedly. Seat pitch has shrunk, meals have vanished, fees have multiplied. The 'cheap' fare is often not as cheap as it appears.
- Fortress hub monopolies have delivered higher fares and reduced competition for millions of passengers in smaller cities.
- Labour conditions have worsened. Repeated bankruptcies were used to renegotiate union contracts downwards. Pilot and cabin crew pay fell sharply in real terms through the 1980s and 1990s.
- The environmental cost of mass aviation — enabled by cheap fares — is enormous and entirely unpriced into the market.
Personal Assessment
Michael Sorsky's Assessment
When I wrote my dissertation in 1993, deregulation was fifteen years old and the jury was still genuinely out. The new entrants were exciting, the fare reductions were real, and the collapse of Braniff and Eastern could be read as the necessary creative destruction of a competitive market. Thirty years on, my view is more nuanced. Deregulation was, on balance, a success for the consumer — but a qualified one. The price reductions are real and significant. The democratisation of flying is a genuine social achievement. But the consolidation of the 2000s and 2010s has eroded much of the competitive dynamism that made deregulation work. We have traded a government-regulated oligopoly for a market-regulated one. The consumer has gained — but not as much as the original promise suggested, and not equally.
The Unfinished Business
The debate over airline deregulation is not settled. The Biden administration's Department of Justice blocked the proposed American–JetBlue merger in 2024, signalling a renewed appetite for antitrust enforcement in aviation. The question of whether the current level of consolidation is compatible with genuine consumer benefit remains live. Deregulation was not a destination — it was a departure. The journey is still underway.