a This fine book represents the latest, and in many ways the most complete, report on the early experiences with U.S. airline deregulation.' Like its predecessors, the analysis covers essentially the first two years or so of deregulation experience: most of the data series end either on or before June 1981, and thus before the traumas associated with the PATCO strike of August 1981 and the major economic recession of 1982.2 The authors were all actively involved in implementing U.S. airline deregulation. Bailey was a member of the Civil Aeronautics Board, Graham was a CAB staff economist, and Kaplan was the CAB's director of economic analysis during the period just before and after formal enactment and signing of the Airline Deregulation Act in October 1978. As a consequence, the book is especially strong on reports and descriptions of the maneuvers and logic underlying the decisions of the CAB during the transition to deregulation. In particular, the authors provide strong insights on how pre-Airline Deregulation Act decisions anticipated and were designed to help facilitate the process of deregulation. In other respects, however, the book's contribution is not so distinct or original. Specifically, most of the basic findings are, not surprisingly, consistent with those in earlier reports on the initial postderegulation experience. In essence, the book, besides providing some new insights based upon the inside experience of the authors, somewhat extends the data base upon which the earlier findings were founded, and in a few instances, particularly in the analysis of airline competitive behavior, brings some new analytical tools or tests to bear on the problem. For example, with regard to what is probably the most important economic aspect of deregulation, airline pricing policy, Bailey, Graham, and Kaplan find that: (1) airline fares since deregulation have become more and more cost related; (2) the airlines have made greater use of offpeak price concessions to improve capacity utilization; and (3) more differentiated fares, reflecting not only cost differences but demand elasticity and other market differences as well, have generally emerged. They also find that this differentiation has perhaps worked less to the advantage of small-town travellers than to those living in and around major hub cities-although their evidence on this is weaker than that found in some other
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Jan 1, 1988
Kevin Boberg + 1
Open Access