Airline Competition: Industry Competitive and Financial Issues

GAO discussed competition in the airline industry. GAO noted that: (1) while competition in the industry increased immediately after deregulation in 1978, competition has steadily decreased since the mid-1980s, and there are now a number of barriers to entry into the industry; (2) the industry is continuing to become more concentrated; (3) continuing large financial losses by the major U.S. airlines may further limit competition; (4) in the last 3 years, two major airlines have ceased operations and three have filed for bankruptcy; (5) profit margins in the airline industry are about half of those in other industries; and (6) strategies for improving airlines' financial status and competitiveness include improving their access to capital by allowing greater foreign investment, enhancing access to international markets, and limiting airport and airline practices that limit market entry.