Airline Competition

Although deregulation of the domestic airline industry has benefitted U.S. consumers through lower fares and more frequent service on many routes, some firms face serious financial problems, and the long-term competitive health of the industry could be at risk. This testimony discusses the interrelated competitive and financial problems of the industry, with a view toward protecting the interests of consumers and ensuring that U.S. airlines are positioned to successfully compete in domestic and international aviation markets. In GAO's view, an effective strategy for reviving the ailing U.S. airline industry should include four key elements: improving airlines' access to capital markets by easing restrictions on foreign investments and control; improving access to the growing international market; reducing barriers to competition; and examining airline pricing practices, especially those of bankrupt carriers.