The stages of abandonment of the American airline

I. Regulation

Although initially disrupted by the US airline, it was envisaged to lead to an increased number of carriers whose divergent conceptions of services, market segments, fleets and route structures would have created new competition, stimulated traffic and reduced tariffs, eventually the complete cycle came and resulted only in the virtual monopoly. Three distinct stages took place during its evolution.

The regulation itself dates back to 1938, when Congress passed the Civil Aeronautics Act. The five-member Civil Aviation Committee (CAB), formed two years later in 1940, regulated fares, authorized routes, subsidies granted, and approved interline agreements, among other functions.

"The regulation, by definition, replaces the decision of the regulatory authority with that of the market," according to Elizabeth E. Bailey, David R. Graham, and Daniel P. Kaplan in their book, Deregulating Airlines (The MIT Press, 1985, p. 96).

Thus, the regulated environment was, in fact, that an airline often had to resort to purchasing another carrier just to obtain the route authority. Delta Air Lines, for example, which has long been interested in providing non-stop service between New York and Florida, has continuously requested CAB for the rights. But the regulatory agency felt that Northeast, a small local service provider often affected by low traffic, financial loss and bad weather because of its route system, needed the potential of Florida's profitable route for increase it back to health and granted authority instead. .

Unfortunately, Delta eventually resorted to the acquisition of the regional carrier and subsequently received the approval for the merger on April 24, 1972. But these extremes will no longer be needed soon.

A future outlook might already be encountered in California and Texas. Without competence in local air transport, CAB could not exercise the tariff nor the authority of routes on the intercity airlines and these carriers, offering, as a rule, high-frequency, single-class services, without friction at half of the fares. the regulated "racing" airlines were forced. to perceive, it has constantly recorded both profit growth and traffic.

Air California and PSA Pacific Southwest Airlines, for example, operating on the Los Angeles-San Francisco market, saw annual traffic growth from 1.5 million passengers in 1960 to 3.2 million in 1965. Southwest Texas-based airlines similarly provided low-fare services between Dallas and Houston and other parts of Texas. These airlines have shown that a true deregulation could generate fares accessible to middle-income passengers, can provide greater choice of airline and service concept and stimulate traffic.

Passengers and the government alike have increasingly enacted regulations in the mid-1970s, citing examples from Air California, PSA, Southwest and other embedded airlines as evidence that the disruption could produce mutual benefits. of airlines and passengers. At least that was the theory.

Ultimately, granting democratic reason and rule, President Jimmy Carter signed the Airline Withdrawal Act on October 28, 1978, eliminating the need for CAB approval of route entry and exit and reducing most of the current tariff restrictions. Even they would eventually be eliminated when the Civil Aeronautics Council, in its famous "sunset", was dissolved in 1985.

At the time of the event, eleven designated "trunk" carriers then collectively controlled 87.2 percent of domestic passenger miles (RPM) revenue, while 12 regional, 258 shuttles, five additional, and four embedded provided RPM distribution balance. What would the sky be like when the dust of the disturbance settles?

II. deregulation

First stage: New generation airlines:

As the airlines in California and Texas, a growing number of non-traction, deregulated carriers initially infiltrated the US market. The first of these, Midway Airlines, was the first to receive certification after passing the Airline Withdrawal Act and the first to actually launch the service in 1979.

Founded three years earlier by Irwing Tague, former Hughes Airwest executive, Midway launched the low-frequency, high-frequency, non-frictionless Rainbow Jet service in November of that year at Chicago's underutilized Midway Airport – which was once the only one. city ​​aerodrome. until O Hare was built and Midway hoped to revive the same as Southwest at Dallas' Love Field – with five single-class, 86-passenger TWA DC-9-10 , originally to Cleveland, Detroit and Kansas City. Its low tariff structure fostered rapid growth and strategically hoped to enter the Chicago market without attracting O'Hare competition from established carriers.

But, being hired by Midway, the author can attest that he has quickly learned three vital lessons, which indicated that he will have to remain extremely flexible in order to survive in competitive market conditions:

Although it served a secondary airport in the Chicago area, it primarily competed in the Chicago market.

Second, after existing airlines reduced fares, load factors decreased.

Finally, the high-density, low-fare strategy, which became the main feature of the memories generated by the disturbance, was ineffective when an airline tried to deal with a particular market segment, such as the one with a market segment. Higher business efficiency, where increased comfort and service was expected.

As a result, Midway has changed its strategy by introducing a cream-colored preservative delivery; single-class, four-seater, business cabin seats, with increased legroom; extra luggage space; and a modernized, free wine flight service, in exchange for fares higher than Rainbow Jet, but those that were still under the unrestricted carrier fares of major carriers.

The recently implemented strategy, called "Midway Metrolink", significantly reduced the number of seats on the aircraft. While DC-9-10 and -30 housed, respectively, 86 and 115 passengers, for example, they were reconfigured for only 60 and 84 in the new Metrolink strategy.

Apparently successful, it caused an explosive increase, from 56,040 initial passengers in 1979 to nearly 1.2 million in 1983.

Capitol Air, another carrier transformed into a disorder of which the author was a part, also experienced an initial rapid expansion. Formed in 1946 under the name Capitol Airways, it started the national charter service with Curtiss C-46 Commandos and DC-4s, eventually obtaining the larger L-049 Constellations, and by 1950 became the fifth largest. additional carrier from USA after World Airways, Overseas National (ONA), Trans International (TIA) and Universal. It acquired the first of what was to become one of the largest Super-Constellation fleets used in January 1960, eventually operating 17 L-749s, L-1049Gs and L-1049Hs over the 14-year period, from 1955 to 1968.

Redesigned Capitol International Airways, the charter airline took over its first pure jet in September 1963, a DC-8-30, and subsequently operated four versions of the McDonnell-Douglas design, including the 30, -50, – Series 61, and – 63, which replaced the Lockheed Constellation as the working chief of his fleet.

Receiving the scheduled authority in September 1978, Capitol inaugurated New York-Brussels service on May 5 of the following year and a second Chicago / Boston-Brussels transatlantic sector on June 19 As PSA and Southwest, Capitol Air, a former supplementary carrier, did not was regulated by CAB and, therefore, conducted its own "experiment of deregulation" by sublimating the proven economy of the single-density, high density, low unrestricted charter and even waiting for the scheduled service to obtain costs and low profitability.

The programmed concept, marked "Sky Saver Service", constantly attracted demand that exceeded the capacity and caused a considerable expansion of the fleet and the route system. Operating six DC-8-61s, five DC-8-63s and five DC-10-10s at seven US, three Caribbean and three European destinations from a New York-JFK hub by 1982, attracted one constantly increasing passenger base: 611,400 passengers in 1980, 1,150,000 in 1981 and 1,824,000 in 1982.

Passengers, unaware of the carriers many disturbances whose low fares could only obtain profitability with used aircraft, seats with high density seats and employees with lower salaries, who have no salaries, often voiced criticism of the non-interlinear policy Capitol Air and refusal to provide meals and hotel rooms during delays and compensations during connections with other lost airlines. However, its rates on the New York-Los Angeles market ranged from $ 149 without restrictions, based on a round-trip purchase to $ 189 round-the-clock, while the major unrestricted major fares rose to the record high. $ 450. As a result, Capitol Air's load factors exceeded 90%.

By September 1981, ten new carriers received operating certificates and inaugurated the service.

"The first effects of the disorder were dramatic," wrote Anthony Sampson in Empires of the Sky: The Politics, Contests and Cartels of World Airlines (Random House, 1984, p. 136). "A new breed of airline entrepreneurs has seen the opportunity to expand small companies or establish" instant airlines "that could reduce fares on local routes; they could dispense much of the superstructure and bureaucracy of the big airlines and could use their flexibility to hit the giants at their weakest points, where they could return quickly. "

Four types of airlines have emerged and have had a considerable initial impact on the traditionally regulated airline industry.

The first ones were the disturbing memories, such as Air Atlanta, Air Florida, Air One, Altair, West America, Best, Carnival, Empire, Florida Express, Frontier Horizon, Jet America, Midway, Midwest Express, MGM Grand Air, Morris Air, Muse Air, New York Air, Northeastern International, Pacific East Air, Pacific Express, PEOPLExpress, Presidential, Reno Air, SunJet International, Hawaii Express and ValuJet.

The second was disrupted local service carriers, including Allegheny, Frontier, Hughes Airwest, North Central, Ozark, Piedmont, Southern and Texas International, which were rapidly exceeding their geographic concentrations required by regulation.

Third, the embedded airlines that cross the borders included companies such as Air California (later AirCal), Alaska, Aloha, Hawaii, PSA, Southwest and Wien Air Alaska.

Fourth were charter-transformed charter, such as Capitol Air, Trans International (later Transamerica) and World Airways.

Although some of these carriers, in particular Air One and MGM Grand Air, targeted very specific market niches by offering premium seats and services, the vast majority, whether raised, raised or matured by deregulatory parenting, have reached (or tried to) get) cost-effective means for several basic operating features, including, of course, low, unrestricted rates, a single hub, short to medium distance route systems, high density seats, limited on-board service, power work with lower wages and a medium range, medium-capacity triplets such as 727, and short-term, low-capacity twinjets such as BAC-111, DC-9, 737 and F.28.

All of them have achieved high load factors, generated extraordinary traffic on existing and emerging markets and created considerable competition.

"In this regard," wrote Barbara Sturken Peterson and James Glab in their book, Rapid Descent: Deregulation and the Shakeout in the Airlines (Simon and Schuster, 1994, p. 307), "the disorder worked like a charm."

Second stage: Monopoly:

Although established, traditionally regulated major carriers have temporarily reduced their tariffs on selected markets concentrated with deregulation airlines, to maintain their passenger bases, established, cared for and protected airlines have not been structured to a profitable operation with them. However, even in those cases where they managed to eliminate competition from the market, another low tariff step seemed to wait in the wings to fill the void.

Thus, the carriers were faced with the possibility of giving up the developed markets very carefully or of reducing the financial resources to retain the passengers until they themselves went bankrupt. It was quickly shown that the reductions in the tariffs caused by the deregulation will become permanent elements of the "new" industry of the unregulated airlines, and the major carriers have finally discovered that they must restructure or transfer to the new airline. Almost all aspects of their operations would ultimately be transformed.

The first aspect was the route system. Traditionally, it consisted of a non-stop, point-to-point service, which originated in 1940 and 1950 CAB route authorizations, these route systems did not at all contain an inherent "system" and consisted of instead of unbalanced geographical enclosures that led to loss of revenue to other carriers and inefficient, uneconomic use of existing fleets. What was really needed was a centralized "collection point" for self-feeding.

Due to the bilateral agreements, the European carriers actually operated the first "hubs", which channel the passengers from Copenhagen to Athens with the help of an intermediate connection point, such as Dusseldorf. Any passenger that will cover the Copenhagen-Dusseldorf or Athens-Dusseldorf sector could theoretically transfer to any of the airlines that radiates outward, greatly increasing the number of potentially serviced markets. These European capital centers have also shown increased use of aircraft, improved traffic flow, a larger market base than traditional point-to-point services, relying solely on origin and destination traffic. and keeping the passenger connected.

"Although passengers prefer a frequent non-stop service, such a service can be quite costly," according to Bailey, Graham and Kaplan (p. 74). "Airlines thus face strong incentives to establish hub-and-speak operations. By combining passengers with different backgrounds and destinations, a carrier can increase the average number of passengers on the flight and thus reduce costs. In essence, the wider operating range allows the carrier to benefit from the economies of scale of aircraft. At the same time, a hub and spoke operation offers more convenient services to travelers in less-traveled markets. "

The first US hub originated in the 1940s, when the government, trying to develop the south, gave Delta long-haul, cost-effective routes in exchange for its agreement to serve more small communities in Atlanta.

"All of these routes have become 'spikes' leading to a 'Delta' hub in Atlanta," said Peterson and Glab (p. 120). "With this came the convincing benefit of detaining passengers."

Allegheny, the former Pittsburgh-based local service operator with no distinct long-term development plan, has achieved considerable success on the Eastern and Central Atlantic State Route network, which has progressively evolved because of its point of entry into Pennsylvania. Increasing the balance of its systems of mainly business routes and communities with longer-range sectors of leisure-oriented destination, was still able to feed this evolution and until 1978 73% of its passengers connected. By 1981, that figure had risen to 89 percent, which means that 89 percent of those flying to Philadelphia and Pittsburgh didn't fly to Philadelphia and Pittsburgh.

The Delta and Allegheny centers were just the beginning of the phenomenon, because the concept did more than create an airline concentration in a particular city. Instead, it resulted in a final monopoly strangulation that prevented any competition.

At four of the major US hubs (Atlanta, Chicago-Hare, Dallas-Ft. Worth and Denver), for example, "the two big carriers simply expressed or made it virtually impossible for other companies." to expand and gain market share, "wrote Julius Maldutis in the Airline Competition at the 50 largest US airports at Deregulation (Salomon Brothers, Inc., 1987, p. 4).

In Atlanta, where both Delta and the East once had hubs, the possibility of any significant competition with third parties was eliminated. In 1978, for example, the percentages of traffic in the Delta and the East were respectively 49.65 and 39.17 percent, while nine years later these figures increased to 52.51 and 42.24 percent.

Analysis of the 50 largest airports (which accounted for 81.1 percent of scheduled passenger plans in the US) indicated that only ten of these airports could be considered less than highly concentrated. On the other hand, 40 (or 80 percent) of the airports had excessive concentrations. The ten most concentrated airports had an airline that owned more than 66% of the market share of passenger plans.

In St. Louis, where TWA and Ozark operated hubs, the former enjoyed a market share of 39.06 percent, while the latter had a 20.21 percent share in 1978. In 1986, these corresponding figures increased to 63.16 and 19.68 percent. The following year, after TWA acquired Ozark, its only significant competitor, it distributed this share at 82.34 percent, with nine other domestic US airlines sharing the remaining 17.66 percent. A list of airline computers, reflecting all carriers operating between the three major airports in New York and St. Louis, on December 1, 1995, revealed 27 flights to this day. None of them were operated by any other operator than TWA! This was power.

Similarly, the Piedmont matured disorder, which only captured a 10.19 percent market share in Charlotte, North Carolina, in 1977, spread into a 87.87 percent monopoly a decade later, after established a hub there. The same transformation took place in Pittsburgh with Allegheny / USAir / US Airways – 43.65 percent in 1977 and 82.83 percent in 1987.

"Since a large part of the markets with city pairs cannot support convenient non-stop service, hub and speech operations have proven to be the dominant strategy for deregulation air carriers," wrote Bailey, Graham and Kaplan ( p. 196). "There has been a significant change from the regulatory vision of the linear systems and to the insulations of the routes."

In addition to the hubbing concept, major carriers have undergone several other fundamental changes. Planes, for example, have been reconfigured for higher density seats and, in some cases, for a single class, while business cabs have expanded first-class sections and coaches on selected routes; The first-class cabins were subsequently completely replaced by those of the business class in a trend-setting model, created by certain deregulation airlines with a special niche.

Fuel inefficient aircraft types have been gradually replaced by new generation projects, and daily use has increased from 8.6 hours in 1971 to 10.3 hours in 1979. In the 1970s and early 1980s, the average size of aircraft was increased in the long-range sectors, while in the late 1980s the size increased in all categories. In the early '90s, pure jet technology first entered all markets – from 50 regional passengers to 500 intercontinental passengers.

Employment has also been metamorphosed. According to Robert Crandall, former president and chief executive officer of American Airlines, "the disturbance is deeply anti-labor … there has been a massive transfer of wealth from the airline's employees to the airline's passengers."

The air fare reductions generated by the deregulation produced a lower revenue and profit base, from which the financing could be re-framed in traditional high-wage salaries and benefit packages, thus requiring employee productivity, cross-use, part-time, nonunion , profit sharing measures. In some cases, the hires were actually insured by the companies contracted for ground services to reduce the compensation for benefits. The author was involved in the initial experiment of the ground services company at JFK International Airport, between Triangle Aviation Services and Royal Jordanian Airlines.

"A relatively new but rapidly developing concept, the service company provides contract staff to the special carrier for whom a certain daily quota is assessed, based on the airport-based airline career (Hicksville, New York, 1995, p. 9). ). "The service company then hires the staff, runs the training programs (if applicable) and determines the hourly wage and benefits package."

After I wore the Jordan Royal uniform and provided all the ground functions, I often felt "trapped in the middle", trying to thank both the passenger and the airline at the same time. After all, they were both my clients, revealing the inherent conflict of the concept.

The low salaries and benefits of the airline employees actually follow their origin to Crandall himself, who devised a plan to reduce the costs of hiring with a "B scale" payment scheme, which initially offered lower salaries to new employees and imposed them to achieve greater longevity before being able to reach the "A-scale" higher levels.

"The American (itself) was able to grow enormously in size and had a strong incentive for it," Peterson and Glab said (p. 136). "The more it expanded, the more workers would all be employed at lower salaries on the B-scale – and the lower its average costs would be."

According to Bailey, Graham and Kaplan in their activity, "Airline deregulation", the regulation created a higher level of industry, monetary compensation and benefits. "It is now clear that inflexible labor rules and higher-than-competitive wages have flourished during regulation. It appears that the airline's employees have benefited substantially from CAB's protection regulations." (p. 197)

Another need for deregulation was the increasing reliance on automation. American Airlines, again run by Crandall, created the first computerized airline reservation system, SABER, which was immediately followed by the United Apollo System. As powerful sales tools, these automated systems were purchased by travel agents who paid the owners a different fee for each booking made while smaller carriers had to negotiate for representation.

These systems have become so sophisticated and multi-faceted that their information has been progressively sublimated by each aspect of the airline's operation, with "booking modes" offering reservations, itineraries, rates, hotel, tour and ground transportation, frequent flight reservations and ticketing; "Their departure control systems" (DCS) that ensure passenger check-in and issue of the boarding permit; and "their modes of control" that use this information for the weight and balance of the aircraft and for the loading plan and the generation of the worksheets.

Only through these sophisticated airline reservation systems, carriers were able to implement "performance management" programs – meaning determining the optimized balance of attracting passengers and high profit-generating rates, based on season, departure time, demand. , convenience, capacity and competition to produce a ultimately profitable flight. A consultation on the airline reservation system, for example, listed 27 separate fares between New York and Los Angeles on December 1, 1995, with American Airlines alone, ranging from an unrestricted $ 1,741.82 first class fare, up to a $ 226.36 round-trip bus fee. . The codes in the "Tariff Bases" column, such as "KPE7HOLN", were accessed to reveal the restrictions attached to each one – whose print included several pages!

Another fundamental change of the deregulated industry was both the structure and the relationship of the regional and transport carriers with the major vessels. Because history is sometimes cyclical, the model once demonstrated by local service airlines abandoning small, low-density community routes when they again purchased pure jet aircraft, but now with two primary differences: (1). The present regions have never, by regulation, been restricted to these routes and (2). Although they expanded rapidly with pure jet fleets, they tried to coexist, rather than compete, with the majorities through code sharing agreements, in which their aircraft appeared in girls similar to most, and their flights carried the two letters of airline affiliate codes.

Of the 300 destinations served by Delta in the latter part of 1995, for example, 85 were actually reached by one of its four "Delta Connection" code-share carriers, including Atlantic Southeast Airlines (ASA), Business Express, Comair, and Skywest – just the first of which still had to purchase pure jet equipment then. The Americans purchased their own shipping lines abroad and collectively named them "American Eagle".

However, the necessary restructuring of the major carrier deregulation was complete.

When TWA matched Capitol Air's unrestricted transcontinental bus fares, the former addition booked 30 passengers on DC-8-61 aircraft, otherwise they could accommodate 252 and cancel their flights. In a similar situation, when analyzing the load factors of PEOPLExpress USAir and upstart, on the Buffalo-Newark market, between August 1981 and June 1982, the latter consistently reported those with at least 20 lower points. .

"The data thus suggests that many consumers have chosen to travel the carrier with better name recognition and facilities when the rate is the same," continued Bailey, Graham and Kaplan (p. 106).

Competition eventually forced Capitol Air to align its route system to include an increasing number of ethnic and undocumented markets and until the majorities were also engaged in this territory, and the carrier remained without too many options than to file for Chapter 11 bankruptcy protection, ceasing operations. on November 25, 1984.

In the middle of the city there was also an opposition with the major carriers. Indeed, no matter what strategy he has implemented to define his optimal niche, it has always been countered by the aggressive majors. Purchasing Air Florida in 1984, for example, reconfigured its aircraft with dual-class seats, but riding on both sides of a drying basket, it soon returned to the single-class concept, and in November 1989, again to double class one, at which time it operated a fleet of 82 people with the affiliation "Midway Connection" and carried 5.2 million passengers annually.

Dar supraexpansiunea și o încercare de a înlocui Orientul în centrul său din Philadelphia în perioadele economice slabe, în concurență directă cu USAir, au dus la dispariția proprie doi ani mai târziu, pe 13 noiembrie.

"Deși aceste numeroase strategii au indicat o reevaluare constantă a cursului său adecvat, acestea au indicat, de asemenea, instabilitatea condițiilor de piață pe cerul neregulat și determinarea companiei aeriene de a rămâne în ele și rezistența acesteia de a le naviga cu o juxtapunere a conceptelor de serviciu, configurații cabină, scaune densități și strategii de marketing ", conform The McDonnell-Douglas DC-9 (Hicksville, New York, 1991, p. 59).

Capitol Air și Midway au fost doar două exemple de transportatori maturizați de dereglare care au cedat majorității radicale restructurate. Într-adevăr, din cele aproximativ 100 de companii aeriene care au fost certificate de la adoptarea Legii privind retragerea companiei aeriene, doar una, America West, încă funcționa la sfârșitul anului 1995.

"(Marile companii aeriene) au implementat o strategie cu ajutorul căreia puteau învinge competiția tarifelor mai mici la propriul joc prin extinderea și taxarea agresivă a tarifelor comparabile, în ciuda pierderilor mari pe anumite rute, toate în efortul de a menține sau, în unele cazuri, , pentru a recâștiga cota de piață … Principalii transportatori au devenit puternici și monopolisti prin eliminarea concurenței oriunde a fost întâlnită ", conform Austrian Airlines Pasager Handling Handling Manual-JFK (Hicksville, New York, 1990, p. 10-11).

Etapa a treia: Megacarrier:

Expansiunea liniei aeriene, odată pusă în mișcare, părea autopropulsată și a rezistat la inerție. Prin definiție, monopolurile nu cunosc granițele. Pasul următor logic a fost penetrarea pieței externe.

Spre deosebire de creșterea internă a Statelor Unite, „cu toate acestea,„ o companie aeriană americană a fost mult mai dificilă pentru a avea acces la o nouă piață externă decât una nouă internă, deoarece serviciile aeriene internaționale erau încă strict reglementate prin acorduri bilaterale între Statele Unite și guvernele străine ", au scris Peterson și Glab (p. 283). "… Pentru a câștiga drepturi de operare imediată într-o țară străină, un transportator american a trebuit să cumpere autoritatea rutelor de la o altă companie aeriană din SUA."

Fenomenul, va fi amintit, a fost o repetare virtuală a structurii guvernamentale interne americane înainte de dereglare. O astfel de achiziție în ultimul caz a fost acordată de obicei numai dacă compania aeriană autorizată de rută a fost în dificultate financiară și a avut nevoie ca veniturile generate de vânzare să rămână viabile.

Pan Am, în special lovit de efectele dereglării, a fost nevoit să-și vândă divizia lucrativă din Pacific, împreună cu aeronavele și facilitățile de la sol, către United pentru 750 de milioane de dolari pentru a rămâne pe linie. United, deja o companie aeriană mare, financiară, avea acum o rețea globală de rute cu alimente interne adecvate.

Mai importantă decât vânzarea, însă, au fost implicațiile sale de anvergură. "Achiziția United Airlines din divizia Pacific Pan Am urma să pună un efect domino", au continuat Peterson și Glab (p. 148) "Multe companii aeriene au fost alarmate de noua competiție cu care s-au confruntat, în special de Nord-Vest, care s-a opus celei mai mari companii aeriene din țară. mutând pe gazonul său Pacific. Nord-vestul știa că va avea nevoie de o rețea internă substanțial mai mare, iar cea mai rapidă modalitate de a obține unul ar fi printr-o fuziune. "

Până la sfârșitul anului 1986, aceasta făcuse doar asta, dobândind Republica, care în sine fusese formată din fuziunea Nord Central-Sud în 1979 și achiziția secundară Hughes Airwest în 1980, iar strategia a răsplătit Northwest cu statut de monopolist la toate punctele sale , cum ar fi Minneapolis, cu o cotă de piață de 81,55%.

Delta, fearing it would be unable to compete with airlines of such magnitude, acquired Western Airlines for $860 million in September of 1986, in the process obtaining a coast-to-coast route structure and new hubs in Salt Lake City and Los Angeles.

The already described TWA-Ozark merger produced such a lock on St. Louis that it controlled three-quarters of all gates and was able to assess much higher fares in those markets where there was no competition.

In fact, these mergers only served to tighten a carrier's already almost unrelenting grip on a particular hub. Deregulation-spawned Empire, for instance-a rapidly-expanding New York State Fokker F.28 Fellowship operator-adopted a Syracuse hub and recorded an initial 1979 market share of just.75 percent, but this exponentially increased to 27.36 percent in 1985 when Piedmont acquired the growing regional. Two years later, its market share climbed to 39.82 percent. However, when USAir in turn purchased Piedmont, the Syracuse hub lock skyrocketed to over 61 percent.

Perhaps the most encompassing (and disjointed) merger was that between PEOPLExpress and Continental, which itself had already been the result of an amalgamation between the original, pre-deregulation Continental, Texas International, and New York Air. PEOPLExpress had equally already absorbed Denver-based Frontier. Texas Air, owner of the new conglomerate, also acquired Eastern, but retained its separate identity.

All these mergers, consummated during the latter half of 1986, unequivocally produced the "megacarrier."

"Deregulation's theme, echoing Darwinian philosophy, clearly demonstrated itself to be 'survival of the fittest,' which, for the airlines, translated as 'survival of the largest,' according to the Austrian Airlines Passenger Service Manual-JFK (p. 10). "If the long-established major carriers… wished to survive and maintain the markets they had so carefully nurtured during regulation, they would somehow have to implement a strategy which would ensure that they would remain 'large.'"

The major airlines' fundamental restructuring, beginning with monopoly and ending with megacarrier, constituted that strategy, as carriers tracing their origins to the infantile days of aviation and bearing names virtually synonymous with the industry fell like a string of acquisition-induced dominoes. By 1995 only seven US megacarriers remained, including American, Continental, Delta, Northwest, TWA, United, and USAir, along with two significant majors-America West and Southwest-a few "niche" airlines, and the regional-commuters which were almost exclusively aligned with one of the megacarriers or majors through code-share agreements.

Even these names disappeared early in the 21st century. Like brides and grooms walking down a monopoly-destined aisle, Delta married Northwest, United took Continental as its lawfully wedded, American joined arms with US Airways, and Southwest tied the knot with AirTran.

III. Concluzie

Although the examples set by Air California, PSA, and Southwest had indicated that a deregulated environment would ultimately prove to be mutually advantageous to both the operating airline and the passenger, these experiments failed to approximate actual conditions, since the rest of the US airline industry was still regulated and these fledgling airlines had therefore been insulated from major-carrier competition. Lacking the authority, cost structure, and equipment, they had been unable to launch comparable service of their own.

The initial proliferation of small, low-fare, no-frills, non-unionized deregulation-spawned, -bred, and -transformed airlines provided tremendous airline-, fare-, and service concept-choice only until the major carriers implemented their fundamental route system, aircraft, employment, computerized reservation system, and regional airline affiliation restructuring, reversing the expansion phase into one of buyout, merger, bankruptcy, retrenchment, consolidation, monopoly, and, ultimately, megacarrier. The upstarts, having lacked the majors' name recognition, financial strength, frequent flier marketing tools, and size, invariably succumbed, leaving most of the original dominant airlines, although in greatly modified form, until even these surrendered to prevailing forces. US airline deregulation had thus come full cycle.