many Americans was synonymous with the era of passenger airline travel, and Eastern Airlines, which carried more
passengers per year than any other American airline -- failed. United Airlines, the nation's largest single
airline, ran into trouble and was rescued when its own workers agreed to buy it. Customers also were affected. Many
found the emergence of new companies and new service options bewildering. Changes in fares also were confusing --
and not always to the liking of some customers. Monopolies and regulated companies generally set rates to ensure
that they meet their overall revenue needs, without worrying much about whether each individual service recovers
enough revenue to pay for itself. When airlines were regulated, rates for cross-country and other long-distance
routes, and for service to large metropolitan areas, generally were set considerably higher than the actual cost of
flying those routes, while rates for costlier shorter-distance routes and for flights to less-populated regions
were set below the cost of providing the service. With deregulation, such rate schemes fell apart, as small
competitors realized they could win business by concentrating on the more lucrative high-volume markets, where
rates were artificially high.
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