Abstract
Three decades after it nationalised its airline industry, India began to ease restrictions in 1986. This study examines the factors that motivated the government to deregulate the industry. It documents the changes in the regulatory system and analyzes the rationale behind the policies adopted by the government. It is concluded that the factors that motivated the government to deregulate the airline industry include the desire to promote economic development, the desire to improve air services and the international trend towards liberalized airline competition.