The more an industry is deregulated, the more it gets concentrated in a few hands. According to research by Paul Stephen Dempsey of McGill University, the idea behind the aviation deregulation in the US in 1978 was to create a more competitive environment. But it didn’t work out that way. Eight mega carriers dominate 94% of the US aviation market. The oligopolistic tendencies aside, there’s another reason for the interest in airline acquisitions—glamour. It is apparently more prestigious to own an airline than an NFL franchise. Now, the ongoing recession will hit the industry, making it even more concentrated, through bankruptcies and LBOs, than it is today.
Title: Robber Barons in the Cockpit: The Airline Industry in Turbulent Skies
Source: Social Science Research Network