Friday, Jul. 09, 2010

1. The Hub System

Deregulation in 1978 ended the era of fixed prices and opened up the skies to a host of upstart competitors. The major carriers, in response, were forced to look for ways to protect their turf. One of the chief ways was to consolidate their routes around certain hub airports. That made for more efficiency, but also horrendous bottlenecks at peak hours (especially in bad weather) and near monopolies for certain airlines at their key hubs — Delta in Atlanta, US Air in Pittsburgh, Continental in Houston — which has kept prices high.