Airline deregulation: Why the supporters lost out

During the debates about deregulation that occured in 1975-1978, a number of airlines, starting with United, broke with the standard industry position and joined a coalition favoring deregulation. The unravelling of industry unity had profound implications and unlikely effects, as deregulation was more complete than initially thought possible and the positions firms took on the issue ultimately diverged from the actual, firm-specific results. This paper attempts to understand the behavior of the defecting airlines. It derives four hypothesis about why a firm would choose an innovative political strategy that is at odds with the standard industry position.