The Capture Theory and the Airline Industry

 The capture theory states that regulation is sought by and acquired by and industry so that it can benefit that industry. The airline industry is a perfect example of this. There are hundreds (maybe thousands) of regulations on airlines in the United States. The basic purpose of all of it, is that no one can obtain a certification to fly commercially until they have met all of these criteria. The airlines have an excellent argument to make for these regulations: no one else can possibly fly safely without these regulations. This is a difficult argument to oppose and it results in the industry being strictly and increasingly regulated.

As a result of all of these rules, there are severe limits to entry into the airline industry. Meeting all of the requirements to obtain a license is time consuming and expensive: you must have adequate and functioning safety mechanisms on all aircraft, must pay for gates at an airport, must not use any copyrighted material, must train and hire enough staff to run your operation smoothly every single day without fail, etc. All of these things are strictly monitored by the FAA and failure to meet any one of them could result in not earning a certification. This enormous barrier to entry has immensely benefited the large companies within the airline industry (over 80% of the market is controlled by just four airlines).