Market Share

After deregulation, and for many years thereafter, the incumbent (legacy) airlines increased mar­ket share over that which existed during CAB regulation. In 1978, for instance, the five largest (incumbent) airlines took in 66 percent of domestic revenues. This excessive control of market share was recited by proponents of deregulation during the Congressional hearings to demonstrate the anti­competitive impact of CAB regulation. The impli­cation was that under a deregulated market, the share of the largest carriers in the overall market would decrease. In 2001, the five-carrier share had actually increased to 72 percent, revealing a central failure of deregulation theory. By 2010, largely because of mergers and acquisitions (American took over TWA, US Airways merged with America West, Delta merged with Northwest, and United merged with Continental), the largest legacy carri­ers still owned 72 percent of market share.

Figure 30-2 is an interesting and informative graphic. Represented here is the period of time between 1975 and 2009, depicting six surviving airlines (four legacy carriers and two low-cost car­riers) as of 2009, along with their merger histories with numerous other airlines over that period. Shown also on a continuum is the market share, based on passengers flown (not revenues), of each surviving airline over the applicable period of time.

Mergers have also altered the rankings of airlines based on measures most tradition­ally used. As of 2012, the largest airlines ranked by passengers carried were 1. Delta Airlines,

2. United Airlines, 3. Southwest Airlines, 4. American Airlines, 5. US Airways, 6. Air Canada, 7. Republic Airways, 8. JetBlue Air­ways, 9. Alaska Airlines, 10. WestJet, 11. Fron­tier Airlines, 12. AeroMexico, 13. Spirit Airlines, 14. Hawaiian Airlines, and 15. Allegiant Air.

Safety

The airline accident rate has been steadily declining since the 1940s. With the introduc­tion of jet aircraft into the civilian airline fleet, the rate of decline increased even faster, so that by the late 1980s, the total annual number of airline accidents had become historically minis­cule. Commuter carriers, flying more turboprop equipment than their larger brethren, have had a proportionately higher accident rate, but over the last two decades even that rate has declined by 90 percent. Since deregulation, the overall fatal accident rate per million miles flown has averaged 0.0009, compared to 0.0135 during the 40 years of regulation. It can be logically surmised that the difference in the accident rate before and after deregulation probably has more to do with the technological advance of aircraft and equipment than with regulation. It should be remembered that economic deregulation did not extend to safety issues. The United States airline industry remains today one of the most heavily regulated endeavors in the world.

Worldwide, the year 2012 marked the low­est rate of fatal accidents since the dawn of the jet age. Including both passenger and cargo flights, in 2012 there were 22 fatal crashes, down from 28 in 2011. The 10-year average is 34. None occurred in the United States. Of those 22 crashes, just 10 involved passenger aircraft and only 3 of those were jets. The remaining 7 involved Western-built or Russian turboprops.

Turboprop operations have significantly higher crash rates, particularly world-wide. Turboprops serve smaller airfields and use less advanced air traffic control equipment than major Western airports.

Russian-built planes historically have accounted for much higher crash rates than Ameri­can or European-built planes. Crash rates in under­developed areas of the world, like Africa, Latin America, and the Caribbean are over four times that of the rest of the world. These regions account for only 7 percent of all global passenger traffic but have recorded nearly half of all accidents in 2012.3

I Employment

From the passage of the Airline Deregulation Act through the first year of the 21st century, the number of airline employees had increased by 50 percent, to 536,400 as measured in full­time equivalents (FTEs).4 Due to the effects of September 11, 2001 and other economic factors during the first decade of the new century, airline employment fell to a low of 376,200 FTEs in April 2010, at which point a slow recovery began.