Air Fares and Service at Concentrated Airports

GAO discussed the nation's airline industry, focusing on: (1) a comparison of yields, or air fares per passenger mile, at 15 concentrated airports, where one or two airlines dominated traffic, with yields for 38 unconcentrated airports; and (2) changes in service levels at concentrated airports between 1985 and 1988. GAO found that: (1) average yields at concentrated airports were 27-percent higher than yields at unconcentrated airports; (2) at 13 of the 15 airports, the dominant carriers had higher yields than other airlines serving those airports; (3) dominant carrier yields usually rose after the establishment of dominance, usually through hub operations; (4) although the number of destinations served directly from concentrated airports and daily departures increased, the dominant carriers accounted for the large increases, reduced service by other carriers offset the increases; (5) the number of destinations served directly from concentrated airports by only one airline rose 25 percent, while the number of destinations served by four or more airlines fell 52 percent; (6) deregulation has led to lower airline fares, while the establishment of hubs has allowed airlines to discover important operating efficiencies; and (7) although vigorous competition has continued on heavily traveled routes, growing concentration resulting from mergers and bankruptcies has led to less competition on many routes. GAO believes that Congress may wish to consider whether or not it needs to take steps to revitalize competition in the airline industry.