The evolution of the commercial airline industry started in 1978 when President Carter signed the Airline Deregulation Act. Before deregulation, airlines were under the strict rules of the Civil Aeronautics Board that governed all aspects of the airline industry. This included the regulations of fares, rates of return, routes, and mergers. Plus, there was no price competition and a very limited number of carriers. After October 1978, fares fell dramatically and new companies began to enter the market. There were several difficulties in the subsequent years contributing to the early 1980’s recession and within the first ten years 150 carriers went bankrupt. The three largest airlines that remained ended up having 80% of the United States air traffic. The market rebounded in the mid-1990’s when the demand for airlines was greater than the supply which resulted in continued entrance in the market and continued failure. In recent years, the industry has gotten more condensed as companies begin to acquire each other. Price competition is still a major part of the industry as well as the struggle for lowering fixed cost to raise profit margins. The airline industry is not attractive to compete in because of its mature state in the product life cycle. The projected growth rate of the airline industry is small because it has become so well developed. Competition is also very fierce in the airline industry, especially after the Airline Deregulation Act created price wars. This same reason is why the airline industry does not have large profit margins. They are also susceptible to social, political, and economic pressures because of the high fixed costs and safety requirements. Airlines do carry industry uncertainty as many carriers have gone bankrupt since the deregulation.
An opportunity for airlines, particularly Southwest, would be growth internationally. As the world