In October 1978, President Jimmy Carter signed the Airline Deregulation Act, which allowed airlines to set their own airfares and choose their own routes. The Page One Economics authors said this freedom spurred competition among airlines, which now compete for the lowest fares to attract customers.

The Airline Deregulation Act of 1978 fundamentally changed the economics of travel by removing government control over routes, flight frequencies, and, most importantly, fare pricing. Prior to deregulation, the Civil Aeronautics Board (CAB) set fixed prices, which essentially turned airlines into a "public utility" where they couldn't compete on cost—only on service (like luxury meals). Once the market was opened to competition, new "low-cost carriers" like Southwest and People Express entered the fray, forcing established "legacy" airlines to lower their prices to remain competitive. This led to the "Hub and Spoke" model, which increased efficiency by funneling passengers through central airports. While deregulation led to smaller seats and the "unbundling" of services (charging for bags and meals), it made flying accessible to the middle and working classes. In 1978, a cross-country flight was a luxury for the elite; by 2026, inflation-adjusted ticket prices have dropped by over 40%, allowing millions more people to travel for business and leisure.