Post-deregulation Passenger Selection of US Airports

This longitudinal study examines passenger boarding (O&D) data from a sample of 306 airports during the post-deregulation period, 1979-2014. Deregulation of the airline industry eliminated barriers to compete for US markets, resulting in a surge of air service entrants and new consumers, as well as the creation of a new regulatory template that would expand air service, worldwide. Price elasticity of demand and its conventions of price discrimination, price dispersion, substitution effect, and income effect explain the rationale and maneuvering of major airlines to reduce ticket prices to contest entrant low cost carriers. While rigorous competition during the study period nearly tripled the number of total annual US passengers, airports did not share equally in the benefits. The nation's largest airports enjoy an annual growth rate that is more than three times greater than the smallest " nonhub " airports. This 36-year comparative analysis of passenger trends provides actual measurements and observations of the evolving pattern of traveler migration to the originating and destination airports of city pairs.