Current domestic passenger air carriers are a much changed collection of firms r

Question

Current domestic passenger air carriers are a much changed collection of firms relative to, say, a generation ago. Gone are Pan American, TWA, Eastern and Braniff. Merged carriers include America West and US Air to make US Airways, and under consideration today, the joining of Delta and Northwest Airlines. Upstarts like Jet Blue, Southwest, Virgin, Midwest Express, and Trump have proven able entrants into specialized, regional, and /or niche markets. But, in summary, a few, maybe 10 or so, large air carriers dominate the nationwide domestic market with small markets like Sioux City IA, Fort Dodge IA, Lincoln NE, West Lafayette IN, and Moline IL wondering

Explanation / Answer

In order to bring back competition into the market and break cartels which act as monopolies, certain jurisdictions have competition laws.

Cartels, which act as monopolies, charge higher fares thus, leading to lower consumer surplus and lower consumer satisfaction. This also implies no competition will lead to lower service by the airline companies. In such cases government intervention is important.

In the U.S there prevails the competition law or the antitrust law to deal with this issue. Also, the government can carry out policies like opening the market to foreign competition so that the global competition leads to more efficiency in the airline industry. Making foreign competition available, government can try to create alternative sources of supply in the market.

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