The Rise of the Low-cost Carrier
But while many bemoan the deterioration in the quality of air travel, the number of complaints is not especially high in relation to the exponentially greater number of people who are now regular air travelers. This is because air fares have dropped very substantially on an inflation-adjusted basis, and consumers are well aware that you get what you pay for. The tradeoff for no-frills air travel in exchange for cheap fares is one that has been widely accepted by the majority of air travelers, and for those who pine for the glamor days of flying, there's always first-class.
While the commoditization of air travel was ushered in by pioneers such as Southwest Airlines Co. (LUV) in the U.S. in the 1970s, the widespread adoption of the LCC concept was accelerated by deregulation of the U.S. airline industry in the same decade. The 1978 Airline Deregulation Act partly shifted control over air travel from the government to the private sector and led to the termination of the all-powerful Civil Aeronautics Board (CAB) in December 1984. (For more, see: How Does Government Regulation Impact the Aerospace Sector?)
The CAB previously had an iron grip on most key aspects of the U.S. airline industry, as it controlled the pricing of airline services, their entry and exit, consumer issues, and agreements and mergers between carriers. This forced airlines to compete only on such tangible service factors like food, cabin crew and frequency, since their hands were tied (or rather, wings were clipped) concerning the most important determinant — ticket price.
Read more: Economic Analysis: The Low-cost Airline Industry (LUV,DAL) | Investopedia http://www.investopedia.com/articles/investing/022916/economic-analysis-lowcost-airline-industry-luvdal.asp#ixzz47AsVex6B
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