What was one effect of airline deregulation on the market?

• A. Led to lower fees and increased competition
• B. Created government subsidies
• C. Increased government involvement
• D. Decreased consumer choice

Answer: (A)

Deregulation shifts control from the government to market forces, letting prices and routes be set by competition. In the airline industry, removing government limits on which airlines can operate where and how much they can charge lets more carriers enter and compete on price and service. With more players vying for travelers, fares and fees tend to drop and travelers gain more flight options. Subsidies or increased government involvement would cushion or steer prices and routes, which runs counter to the competitive dynamics deregulation aims to create, and a less competitive market would usually mean fewer choices for consumers.