The Real Cost: How US Airline Deregulation Democratized Air Travel.

The golden age of air travel is a myth.

Viral social media posts show spacious cabins. They feature dressy passengers and luxury food service. However, those flights were unaffordable for most Americans.

Before the 1970s, flying was a luxury good. It was not a common mode of transportation.

The Era of Regulation and High Fares

Commercial aviation was heavily regulated for decades. The Civil Aeronautics Board (CAB) controlled all routes and fares. This federal oversight began in the 1930s.

The CAB discouraged competition. It made starting new airlines very difficult. This limited market competition kept ticket prices extremely high.

In 1970, a round-trip flight from New York to Los Angeles cost about $150. This was more than the average weekly wage of $119. Adjusted for inflation, that ticket would cost well over $1,000 today.

This high cost meant most people simply did not fly. In 1965, fewer than 20 percent of Americans had ever taken a commercial flight.

The Rise of Low-Cost Competition

Some entrepreneurs sought ways around the CAB's rules. Herb Kelleher cofounded Southwest Airlines in 1967. Southwest initially operated only within Texas.

This single-state operation meant the airline avoided CAB regulations. Kelleher embraced ruthless efficiency and low prices. He aimed to democratize air travel for the masses.

Southwest faced four years of intense litigation. Other airlines sued to stop the upstart carrier. Kelleher famously worked for free until the case was won.

Southwest's first flight finally departed Dallas Love Field in 1971.

Deregulation and the Economics of Access

True change came with the Airline Deregulation Act of 1978. President Jimmy Carter and Congress worked together on this legislation. The act began phasing out the CAB's authority. The CAB was fully abolished in 1985.

This shift moved ticket prices and routes to a free market. Efficiency and low prices became the key to survival. Southwest was perfectly positioned for this new environment.

In the two decades after deregulation, eight major airlines failed. They either went bankrupt or were bought out. Southwest, a low-cost carrier, became one of the country's largest airlines.

Deregulation caused a dramatic drop in airfares. Average yield per passenger mile declined by 42% in real terms between 1976 and 1996. Passengers now save an estimated $19.4 billion annually.

The Passenger Volume Explosion

Cheaper flights led to a massive surge in travel. US passenger volume climbed from 207 million in 1975. It reached 876 million passengers in 2024, according to IATA. By 2000, the average American was taking at least two round-trip flights yearly.

Today, air travel is significantly more affordable. The average domestic airfare in the second quarter of 2025 was $386, reports the Bureau of Transportation Statistics (BTS). This price is down 39.5% from the highest second-quarter fare in 1999.

An average worker today needs about 10 hours of work to pay for that flight. This is a stark contrast to the week's worth of pay required in 1970.

While comfort has decreased, accessibility has soared. The trade-off has been lower fares for fewer amenities. This includes the rise of ancillary fees, like baggage charges. The low base fare, however, remains the primary driver for most travelers.

The economics of modern air travel are clear. The ability to fly is now available to the masses. This is a far greater benefit than the luxury of the past.

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