The third Monitoring European Deregulation report looks at recent developments in the European airline industry following liberalization. It assesses the impact on consumers and firms so far and compares developments in Europe to the U.S. experience. Using an analytical framework for assessing the degree and nature of competition in airlines, the authors examine the direction in which the industry is currently headed before concluding with an assessment of what is needed in terms of European policy.The European airlines industry went through deregulation relatively early. This report, therefore, offers a good case study for exploring the effects of liberalization and assessing who the winners and losers of deregulation really are.