Before 1978, the Civil Aeronautics Board regulated airlines, controlling the fares they could charge and the routes they could fly. Legislatively mandated to promote the air transport system, the Board believed that passengers traveling shorter distances--more typical of travel from small and medium-sized communities--would not choose air travel if they had to pay the full cost of service. Thus, the Board set fares relatively lower in short-haul markets and higher in long-haul markets than would be warranted by costs. Concerned that such practices caused inefficiencies and inhibited the growth of air transportation, the Congress deregulated the industry. Deregulation was expected to result in (1) lower fares at large-community airports, from which many trips are long-distance, and somewhat higher fares at small- and medium-sized-community airports; (2) increased competition brought about by new airlines, commonly referred to as "new entrant" airlines; and (3) greater use of turboprop (propeller) aircraft by airlines in place of jets in smaller markets that could not economically support jet service.
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