The first part of this essay showed how public intervention in air transport has been used as a means of reducing the cost to public funds of facilities required by governments, or of obtaining additional facilities for given subsidies.2 This part is concerned with the merits of such intervention, and more generally with the case for and against public regulation. The discussion again relates chiefly to the regulation of domestic airlines. It will save repetition if certain objections to regulation are stated at the outset. The administrative process is usually fairly lengthy and expensive, and tends to delay the introduction of desirable changes. If a quasi-judicial procedure is adopted, legal principles may be established which have the appearance of equity but conflict with economic criteria of resource allocation. Even an authority concerned only with applying such criteria could not hope to deal with any but the most obvious wastes, because of theoretical difficulties and lack of information. The usual procedure of hearing objections before allowing new entry or other changes tends to favour existing operators, particularly the large firms whose co-operation is desirable if controls are to work smoothly. Finally, regulations and authorities often outlive their usefulness, and remain only to impede progress. In order to make a convincing case for regulation it is therefore not enough to point to some possible benefits; it is necessary to show that they outweigh the preliminary disadvantages.