Have you flown recently? You might feel like your options are more limited because of trends in air service and recent airline mergers. But do you really have fewer airlines to choose from? In the last several months, GAO has reported on changes in the airline industry and their implications for consumers and communities.
- Air Service to Small Communities: We testified in April 2014 that air service throughout the country—as measured by the number of flights and seats available—has decreased since 2007. We also reported in June 2014 that more than a million domestic flights were eliminated between 2007 and 2013 with the biggest impact at airports that serve small and medium-sized communities. The largest airports experienced the smallest reduction in air service.
Excerpted from GAO-14-515
Air service to small airports has decreased due to higher fuel costs, population decline in many small communities, and more attractive service (i.e., larger airports in larger cities) within driving distance of some small communities.
- Mergers and Competition: Even though U.S. airlines are offering consumers fewer domestic flights, we reported in June 2014 there has been very little change in the average number of airlines serving the most popular domestic city-pair markets (i.e., New York to Los Angeles and Washington, D.C. to Boston) from 2007 through 2012. While larger city-pair markets were mostly unaffected, smaller markets did experience a small decrease in the average number of airlines serving them.
Excerpted from GAO-14-515
This result may seem surprising, especially in light of the wave of consolidation across the airline industry and the fact that the four largest domestic airlines—American, Delta, Southwest, and United—now sell roughly 85 percent of all U.S. passenger tickets. However, we found that mergers create larger networks and new city-pair connections. In addition, low-cost airlines have expanded since 2007, thereby adding new competing airlines in some larger markets. We expect the structure of the U.S. airline industry to continue to evolve as economic conditions change and recent airline mergers are fully implemented.
These airline industry changes have had mixed impacts on consumers. On the one hand, consumers have seen higher airfares, additional fees, and fewer flights in certain markets. Air travel cost about 4 percent more, on average, in 2012 than in 2007, even before considering additional fees, such as those for checking a bag. The airline industry has reduced flights to all airports, especially to smaller airports. As a result, flights today are fuller than ever and cancellations or delays have more ripple effects. On the other hand, consumers have also gained access to new air service and expanded networks. In addition, consumers may benefit from new airline services, such as expanded entertainment options and WiFi, as airlines aim to increase revenue and differentiate themselves from their competitors.
- Questions about the content of this post? Contact Paul Aussendorf at [email protected].
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