Aviation Business Heuristics

Several scheduled passenger airlines emerged in Europe shortly after the end of World War I in 1918. Economic regulation of routes and prices followed shortly thereafter and prevailed for much of the 20th century. Latein the century, the deregulation of the U.S. Airline industry began a trend followed by the European Union and then much of the rest of the world. This history provides a foundation for understanding today's complex, competitive, and global airline industry. After outlining the growth of the early airlines in Europe, the focus shifts to the United States, beginning in 1918 with airmail operated by the U.S. Post Office. Using this early airmail endeavor as our starting point, the chapter traces the fledgling industry through the years of economic regulation under the Civil Aeronautics Board until economic deregulation in 1978, emphasizing the economic, regulatory, and technical evolution that shaped the industry. To gain a broader perspective on the deregulation process and outcome, the U.S. experience is compared with that of Europe and China, leading to the conclusion that competitive results are remarkably similar.