Intrastate airline

As detailed below, flying within the geographic boundaries of a single state was a necessary but not sufficient condition to qualify as an intrastate carrier.

[5] While PSA and Air California had minor impact thereafter, choosing to become effectively traditional carriers and being swept up in the first decade of post-deregulation consolidation, Southwest stuck to its business model and became the most consistently successful airline in the United States, in turn inspiring many copycats worldwide.

It also meant that when the CAB allowed interstate carriers competing on such routes (e.g. United Airlines and Western Airlines) to match the lower fares of PSA, such fare matching applied only to tickets sold within the state of California - on purchases of tickets outside of California on United on a route within California that competed with PSA, normal (higher) CAB fares applied.

As an example, in the dying days of the regulated era, the CAB was still engaged in a fight with PSA and Air California over the service of these carriers to Lake Tahoe Airport.

First, the carriers did participate in interstate commerce by, for instance, selling connecting tickets to the rest of the United States.

In 1967, the CAB provided Pacific Southwest Airlines with a specific exemption to allow it to fly between Los Angeles and San Francisco more than three miles offshore.

Federal Aviation Administration asked PSA to request CAB permission to use such a routing in the name of safety.

Only in that year did legislation increase the CPUC's authority to airline certification, market entry/exit and service quality.

In Texas, enabling legislation specified that the TAC was to encourage and develop intrastate air service.

[16] During the regulated era, certification of new domestic scheduled passenger carriers by the CAB was extremely rare.

The 1978 Airline Deregulation Act effectively abolished federal economic regulation of domestic air travel in the United States starting in 1979 (the CAB was dissolved in 1985 under the same legislation).

CCA was credited to moving most transport between Los Angeles and San Francisco from ground to air, which was noticed nationally.

PSA became super dominant within California, with a market share as high as 70%[22] and playing a substantial role in the life of the state.

[23] However, in the late 1960s and early 1970s it became distracted by ill-conceived diversification into hotels, rental cars and radio stations, and made a very poor decision to buy wide-bodied aircraft, leading to significant financial distress.

Southwest was fortunate that deregulation occurred when it did, almost at the exact time the airline ran out of Texas cities to which to expand.