Airline Competition

Pursuant to a congressional request, GAO reviewed the effects of increased concentration on air fares and service at major airports around the country, focusing on: (1) the fares and service levels of 15 airports where one or two airlines handled most emplaning passengers; and (2) a comparison of fare levels at the concentrated airports with fares at 38 relatively unconcentrated airports.

GAO found that: (1) in 1988, airline yields for all carriers at the concentrated airports averaged about 27 percent higher than yields at the unconcentrated airports; (2) yields for dominant airlines were generally higher than yields for other carriers at the concentrated airports; (3) airline yields rose following the establishment of dominance; (4) the number of destinations served directly from concentrated airports increased 10 percent, and the number of daily departures increased 3 percent between May 1985 and May 1988; (5) competition among airlines had lessened at the concentrated airports; (6) fares at 13 of the 14 concentrated hub airports were above the industry average; and (7) most air travellers received more service and lower fares under deregulation.