GAO Study Finds Little Decline in Competition on U.S. Air Routes

Government Study Examined Five-Year Period of Major Airline Consolidation

WSJ article by Jack Nicas. Excerpts:

"A government study concluded that there was relatively little decline in competition on U.S. air routes during a recent five-year period of airline consolidation, in part crediting the rapid expansion of discount carriers."

"On the 37 most-traveled U.S. routes, traversed by about 83 million fliers a year, the number of airlines providing nonstop or connecting service decreased to an average of 4.3 in 2012 from 4.4 in 2007, the GAO found. The report counted only airlines with more than 5% of the market on the given routes. On the 9,379 smallest city pairs, also traveled by 83 million passengers, the average number of competitors decreased to 3 in 2012 from 3.3 in 2007."

"markets maintained competition in part because low-cost airlines expanded rapidly into busy markets.

The average number of discounters in each of the 37 busiest city pairs increased to 2.3 in 2012 from 1.7 in 2007, the report said."

"The GAO also said that while mergers can eliminate a competitor on many routes, they also can create new connections. The 2010 United-Continental merger, for example, created a new option for fliers between Fargo, N.D., and Amarillo, Texas, through a stop in Denver, the report said."