BIRTH, MARRIAGE, LIFE, AND DEATH: A LIFE-CYCLE APPROACH FOR EXAMINING THE DEREGULATED U.S. AIRLINE INDUSTRY

Abstract

After more than a dozen years of airline deregulation older large carriers saw their market shares fall as innovative entrepreneurs entered the arena and many of the previously constrained smaller companies became increasingly aggressive. The year 1985 marked the high point of airline deregulatory accomplishment. Recently, many reversals of the competitive trend have occurred and the industry is now more highly concentrated than before the Airline Deregulation Act of 1978. Using life cycle analysis, this study examines the dynamics of competition in the airline industry and the resulting changes. Life cycle analysis is a valuable approach to help explain success and failure among the airlines. It also leads to insights concerning the complex inter-relationships among government policy, economic theory, carrier strategy, and competitive dynamics.