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Mega-Mergers Have Led to Higher Fares, U.S. Airports Being Dominated by Only 1 or 2 Carriers

An AP analysis of airports finds that in the wake of airline consolidations, several U.S. airports have only one or two dominant carriers competing for passengers as air fares edge higher.

A study published by the Associated Press (AP) in association with the flight-tracking service Diio, seems to disprove the airline industry’s promises that big airline mergers would ultimately benefit the flying public. The analysis found that the consolidation trend has resulted in dominant carriers at many U.S. airports with little or no competition in those markets. The dwindling competition has often resulted in conspicuously higher airfares according to the AP analysis.

The AP found that one airline controls a majority of the market in 40 of the 100 largest airports in the U.S. and no more than two airlines control the majority of air travel in 93 of those airports. Meanwhile, airfares have increased at a far higher rate than inflation over the last ten years, a period which has seen massive airline consolidation. The increase does not include the uptick in additional fees such as checked bag fees and rebooking charges that have soared during the same time.

American Airlines CEO Doug Parker completely dismissed any suggestion that airline mergers have reduced competition or resulted in higher fares. “We have increased flying out of each of our hubs,” Parker told the AP. “We want to expand. That’s good for consumers, not bad.”

The Department of Justice (DOJ) has launched in investigation into charges the four largest US airlines conspired to keep industry-wide capacity low, thereby helping to protect these sort of de facto monopolies and artificially inflating air fares. At least two federal class-action lawsuits have been filed by flyers who claim to have paid more for airline tickets than they otherwise would have as a result of the alleged practice.

[Photo: iStock]

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diver858 July 17, 2015

This is primarily the case of nonstop flights, particularly to and from secondary airports. It is not unusual to find great deals on AA, DL, UA on 1-stop flights which compete with nonstops to/from hubs, 14 - 45 days prior to departure. There is another reason why fares have gone up: airlines are doing a better job matching capacity to demand, reducing inventory, keeping planes full. Airlines are one of the toughest industries to make a profit, just one recession or negative world event away from bankruptcy. I would like to see data over longer periods of time, which factor in airline profitability.

NWAOldtimer July 16, 2015

Seems completely obvious that oligopoly would lead to much higher fares, additional fees, enormous devaluations of frequent flyer miles. The only question is, why did the DOJ approve the last merger, of US Air and AA? I'd bet that regulatory capture was the reason here. as with the banks. I suspect that one or more individuals at DOJ got paid off with a cushy job etc