Aviation Competition: Challenges in Enhancing Competition in Dominated Markets

The major network carriers dominate traffic at most of their large hubs and extensive evidence exists that fares in markets where competition is absent are consistently above competitive levels. GAO believes that the oversight scheme contemplated when the industry was deregulated--with antitrust enforcement by the Department of Justice (DOJ) and oversight of unfair trade practices by the Department of Transportation (DOT)--has not been entirely successful in preserving and ensuring competition. Although the current legislative scheme grants explicit authority for DOT to regulate unfair competitive practices, the legislation does give DOT substantial leeway on the scope of its action. Thus, with the range of competitive challenges confronting the industry and directly affecting consumers, especially in the face of unprecedented industry consolidation, GAO believes there is merit in the overall intent of the proposed Aviation Competition Restoration Act to direct DOT to actively monitor the state of competition in the industry and to institute remedial actions as appropriate.