The third lesson is that the differences between the regulated and deregulated airline industries tend towards the margins. If a regulatory scheme with a pro-competitive legislative mandate is administered properly, it should produce results that mimic an ideal open market. The deregulated regime, to the contrary, is more likely to result in the ideal competitive norm but with extremes on both ends. That is why the U.S. airline industry today is such an environment of contradictions. Concerns about consolidation co-exist with concerns about outsourcing.
Prices are too high and too low.
Deregulation has no impact on safety and reliability, but something must be done about safety and reliability. In the end, it is the public s perception of those extremes, and the accompanying political will, that decide the longevity of deregulation. The industry is highly sensitive to external factors ranging from the weather to the price of fossil fuels, and it is driven as much by technology as by economics. The difference between the industry ten years from now and the industry we see today could be as great as the difference in the industry in 1978 versus 1938. With change as the only constant, any regulatory configuration is possible.