ting under these types of conditions, and the number of new carriers per year before deregulation was significantly lower than the number of new carriers after deregulation.
Because rates were approved by the government, price was not the primary competitive factor in the regulated environment. Instead, airlines would compete on service and image. Any carrier could transport a passenger from point A to point B; it was up to the marketing effort to single out one airline's service, or baggage handling record or on-time performance. Since airlines could charge different prices for different types of service, first-class and coach class were invented. First class passengers paid higher fares, but received more comfortable seats, better food and free drinks. Coach passengers offered a higher load factor, but paid less (sometimes as much as 50 percent less) than their first-class counterparts. The airline industry was characterized by giants (American, United, TWA) who offered nationwide and some international service, with nonstop routes for longer trips (such as New York to Los Angeles), and by regional carriers, such as Southwest, which offered short trips between airports not served by the nationals.
The rules of the airline industry changed in 1978, however; deregulation introduced an entirely new playing field on which the national carriers and regional carriers were suddenly able to compete in an environment that resembled a free market. Rate schedules were lifted, price fixing was eliminated and route management was removed. The main factors that affected whether an airline could serve a particular city was whether o
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