Legacy Carrier

A legacy carrier is an airline defined by its regulatory history rather than by any single feature of its current business model: the term applies to airlines that were economically regulated in the United States by the now-defunct Civil Aeronautics Board during the period of airline regulation from 1938 to 1978, when the board ran the industry as a cartel, strictly limiting competition between carriers and setting fare levels nationally. When the industry was deregulated in 1979, these established airlines inherited what is often called a legacy of high costs built up under the old regulated system, and struggled to compete on price against new entrants that had no such inherited cost structure. To remain profitable in a newly competitive market, legacy carriers built complex operating strategies of their own, including hub-and-spoke route networks, frequent-flyer loyalty programs, and sophisticated revenue management systems that vary ticket prices by demand and customer segment. Airlines founded after deregulation, such as Southwest, JetBlue and Spirit Airlines, fall outside the legacy carrier category altogether, since they built their operations from the start without the regulatory inheritance or cost structure that defines the term.