ting in these markets, (3) drive the smaller airlines out of the industry, and (4) eventually raise prices in the medium haul markets. Many of the managements of the larger airlines said publicly that they feared that deregulation would ultimately result in (1) an oligopolistic airline industry in the United States, which (2) would be far less competitive than the industry which existed in the mid 1970s. The real fears of the managements of the larger airlines, however, were more likely concerned with the loss of protected markets, and the loss of preferential governmentally established fare structures. Airline industry executives opposing deregulation lauded the Civil Aeronautics Board (CAB) for creating a cohesive and an effective national air transportation system, and urged the board to retain the system in its existing form.
The appointment of John Robson as CAB chair in 1975 proved to be a turning point in the move toward regulatory reform in the air transport industry. While professing neither support for or
opposition to deregulation, Robson did indicate that he was willing to experiment with the introduction of laissez faire policies into the regulation of the industry. Under Robson's leadership, the CAB either permitted competition for the first time, or increased competition on what had in the past been either monopoly or near monopoly routes. These relatively small changes were viewed as revolutionary in the context of the existing regulatory system. In July 1976, the Civil Aeronautics Board voted permit regulated interstate air carriers to lower fares, to enable them to better compete with unregulated (by the CAB) intrastate carriers. This action was followed in February 1977 by a General Accounting Office (GAO) report contending that regulation of the airline industry had cost American consumers approximately $2 billion per year from 1969 through 1974. The report recommended the introduction of greater...