Merger For Success In The US Airline Industry Research Paper

Merger For Success In The US Airline Industry - Research Paper Example Prior to regulation, there were no reports of airline bankruptcy. However, since deregulation in 1978, bankruptcy has become commonplace.    Between 1978 and 2001, nine major airlines inclusive of America West, Braniff, Continental, Eastern, Pan Am and TWA and more than 100 smaller carriers declared bankruptcy or liquidated its assets (Kaps, Hamilton & Bliss, 2012). The irony is that deregulation was thought to be appropriate on the basis that previous concerns about distorted competition and monopolies had been unfounded (Kaps et. al., 2012).   As Kaps et. al. (2012) explained, government officials believed that the dynamics of the market would facilitate operations â€Å"approaching pure market competition without governmental economic regulation† (p. 7).  Prior to regulation, there were no reports of airline bankruptcy. However, since deregulation in 1978, bankruptcy has become commonplace.    Between 1978 and 2001, nine major airlines inclusive of America West, Bra niff, Continental, Eastern, Pan Am and TWA and more than 100 smaller carriers declared bankruptcy or liquidated its assets (Kaps, Hamilton & Bliss, 2012). The irony is that deregulation was thought to be appropriate on the basis that previous concerns about distorted competition and monopolies had been unfounded.   As Kaps et. al. explained, government officials believed that the dynamics of the market would facilitate operations â€Å"approaching pure market competition without governmental economic regulation†.† (p. 7). The terror attacks of September 11, 2001 introduced greater difficulties for an already struggling airline industry (Wensveen, 2011). Losses to the US airline industry following the September 11, 2001 amounted to an estimated US$17.7 billion. However, it has been argued that the failures in the airline industry cannot be entirely attributable