Airline Deregulation

in regulating and overseeing air safety. Deregulation was expected to result in lower fares at large-community airports, from which many trips are long distance, and somewhat higher fares at small- and medium-sized community airports. Increased competition from new airlines because it was not possible to enter the market without need to be approved by the CAB. Greater use of turboprop (propeller) aircraft by airlines in place of jets in smaller markets was also expected because these smaller areas could not economically support jet service.
             In 1990, the General Accounting Office found that overall fares had fallen not only at airports serving large communities, as was expected, but at airports serving small- and medium-sized communities as well. It can be noted, however, that despite the overall trend toward lower airfares, some small- and medium-size community airports had experienced substantial increases in fares following deregulation, especially in the Southeast. As of the first six months of 1995, airfares overall continued to be below what they were in 1979 for airports serving small, medium, and large communities. Comparing full-year data for 1979 and 1994, the fares per passenger mile, adjusted for inflation, were about 9% lower for small-community airports, 11% lower for medium-community airports, and 8% lower for large-community airports.
             Despite the general trend toward lower fares, however, fares at small- and medium-sized community airports have remained consistently higher than fares at airports serving large communities, largely because of the economics associated with traffic volume and trip distance. As the volume of traffic and average length of haul increase, the average cost per passenger mile decreases, allowing for lower fares. Airports serving small- and medium-sized communities tend to have fewer heavily traveled routes and shorter average distances, resulting in higher fares per passenger mile compared wi...

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