Low Cost Airline Service Revolution

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Low Cost Airline Service Revolution

R. D. Bennett / J. M. Craun

Since its deregulation in 1978, the U.S. airline industry has been in a continual state of evolution. The two most important operational developments that have taken place in the domestic industry are the formation of hub-and-spoke networks and the recent surge in new entrant activity, particularly new airlines with low cost operating strategies. This study concentrates on new entry by airlines with low cost operating strategies. The purpose of this study are to report in detail on the very rapid growth and competitive successes of low cost carriers, the resulting consumer benefits, to identify where low cost service has not yet succeeded and the higher prices consumers are paying there as a result, and to reaffirm the Department's resolve that new entrants to given a fair chance to compete and underscore the Department's determination to examine why low cost new entry is more successful at some cities than others.