Airline Regulation and Service to Small Communities

A major point of contention in the debate over deregulating the US domestic airline industry is the effect of deregulation on service to small communities. Opponents of deregulation claim that Civil Aeronautics Board (CAB) regulation has resulted in the airlines providing unprofitable service to small communities that would not be provided in the absence of regulation. Proponents of deregulation feel that the role of regulation in preserving such services has been overstated. Because of this disagreement, there is a need to clarify the role of regulation in preserving services to small communities. Three factors are analyzed in this study: the CAB's abandonment policies, the CAB's subsidy programs, and the presence of unsubsidized commuter carriers. It is determined that a maximum of 49 communities now receiving service are unprofitable to serve under existing CAB policies and that only these 49 might lose service in the event of total deregulation.