American Airlines is now the #2 carrier at SFO (Photo: InSapphoWeTrust / Flickr)
Following the recent decision by the Justice Department to start investigating whether major airlines might be colluding in their capacity decisions, the Associated Press has conducted an analysis of major U.S. airports that finds industry consolidation seems to be having an impact on competition.
As a result of that diminished competition, “passengers appear to be paying the price in higher fares and fees,” AP said.
Analyzing data from a firm that tracks airline schedules, AP said that over the past decade, the number of U.S. airports where a single airline controls a majority of the seats for sale has risen from 34 to 40 of the 100 largest airports. And one or two airlines control a majority of seats at 93 of those airports, up from 78 a decade ago, AP said.
During that same time, the analysis found that domestic fares have gone up 5 percent — but that doesn’t take into account the wave of new passenger fees that airlines started to implement seven years ago, which have brought them billions of dollars in added revenues that didn’t exist before.
Airline mergers have been major factors in market control in recent years, AP noted. For example, since AirTran merged into Southwest and scaled back at Atlanta, Delta’s market dominance there has increased to 80 percent of seats available, and average domestic fares there went from 6 percent below the national average to 11 percent above.
At Philadelphia, US Airways used to control 66 percent of capacity; since its merger with American, AA/US Airways controls 77 percent, and airfares have gone up accordingly.
American has also increased its market share at San Francisco, where it now ranks in the number two spot after United. Ranking below AA, in order, are Virgin America, Delta, Southwest, Alaska and JetBlue according to an SFO spokesperson.
The AP analysis noted that the reverse trend is happening at a few airports, like Denver, where Southwest’s big buildup in recent years led to a reduction in United’s dominant market share there, and fares that are now 15 percent below the national average. It also cited Seattle, where Alaska and Delta are both adding capacity in a battle for market dominance.
Readers: Have you noticed? Please leave your comments below.
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Lufthansa is not a state-funded carrier and neither is SQ. It’s the 21st century and an example from the early 20th century cement industry is hardly a fitting comparison. The US can choose which countries to provide these air-freedoms to, for example only countries that have a similar market approach, for example in Europe. Protectionism isn’t the solution and neither is re-regulating the industry…
Oh, come on it was meant to be funny. Delta is a great airline. My point is, having worked in the industry for a long time, every carrier has their time in the spotlight – both good and bad.
I seriously doubt that. This is just the first round of negotiations. They still have 5 months to make a deal; it will happen. But anyways, even if we do accept your silly notion that DL is headed for the dumpster in a few years, that’s still no reason to fly UA, who have been in the dumpster for 5 years and seem very comfortable staying there.
Does anyone realize that – despite the mergers – we are seeing fares rise due to a strong economy? It just so happens that both are happening at the same time.
Kirk, that is until Delta pilots get more and more angry about their contract negotiation failures. Then, Delta will have its turn in the performance dumpster. 🙂
The government will step in and cut off obvious abuses. They have already forced some degree of transparency in pricing and I anticipate an adjustment to baggage fees as the madness of ever more stuffed overhead bins and ever slower boarding spirals out of control. Perhaps some combination of strictly enforced, government mandated industry-wide limits on sizes and weights of carryons combined with one free bag per fare and a low maximum fee for a second bag. This could be pitched as a combination of boarding speed up and passenger safety, as deplaning oversized and overweight carryons is accident-prone.
There is no way the airlines would be allowed pay toilets.
Absolutely not… that would be handing state-funded carriers with a vested interest in bankrupting our domestic carriers a free pass. Check what happened to the cement and concrete industry all over America during the early 20th Century… outsiders would come in, lower prices to the applause of superficial observers, break the locals and then jack up prices much higher than they were before. In response to repeated abuses, Minnesota, North Dakota and South Dakota established a state-owned cement and concrete monopoly: it was not re-privatized until the 1970’s or 1980’s.
The best way to protect against this sort of predation is our current system, which prevents foreign interests from gaining a position to wage economic warfare from without. Virgin followed it, and Etihad, Emirates, etc can too if they choose. If they choose to whine double-speak about freedom of competition instead, ignore it: there isn’t any freedom in the North American sense of the term where they come from… not even in Dubai.
and the answer is… E+ seating. I flew on Delta on my last SFO-MSP trip and the number of seats available for Comfort + was very limited.
We would have left UA if it weren’t for MP Gold status and complimentary E+ seating. I may be on a late flight, but I’m usually in the bulkhead or exit row… Should the E+ product or its availability to elites change, I think the decision would be easy.
ONLY because you chose to fly UA. Seriously, based on your own evidence, that’s not a very smart move. DL employees are raking in a fortune in profit sharing and the vast majority are very happy and eager to please. With it’s increased revenue, DL has already revamped its entire international fleet (every business seat has direct aisle access, for example) and is now revamping the entire domestic fleet. They now guarantee your checked bag will be delivered within 20 mins of the plane parking at the gate. On-time percentage is up as well and non-weather cancellations are very rare nowadays.
Your gripe is not with the mergers; it’s with your own failure to chose a reliable airline. And btw, I’m based out of SFO as well, so that’s no excuse
I am a travel agent, I have seen the airfares sky rocket over the last 2 yrs with ridiculous fares out of every major market. The only way to get a cheap fare is to take connections or book 5-6 months in advance. The airlines are making money hand over fist and putting NONE of that money back into their planes or customer service. This whole consolidation of the airlines was a HUGE mistake and it is only going to get worse when USAIR goes away. The Consumer will be left with fewer choices and extremely high prices. The govt needs to step back in and investigate their whole pricing platforms. The Travel Industry as a whole has just gone from bad to worse, such a shame.
The old-fashioned newspaper. And it has been in ALL newspapers…
I always supported mergers, but I am beginning to think some of them were a mistake. Southwest in ATL took out a very nice, inexpensive carrier (AirTran), then shrunk like a violet. The end result, prices on Delta are sky-high. I don’t blame DL, why sell tickets cheap if there is no competition? That’s what AirTran provided, nice full-service airline with low fares.
General discussion happening here:
http://www.airliners.net/aviation-forums/general_aviation/read.main/6452265/
I’m catching up on email as I wait to drive to the airport to pick up my husband from yet another delayed United flight. His outbound was 5 hours late due to the July 8th computer glitch.
Having some “extra time” afforded me the chance to find a Wall Street Journal about the glitch. Among the details, the article noted that in June nearly 50% of United’s flights arrived late. That seemed consistent with my experience last year where about 50% of my United flights shared the same fate.
Reflecting on the article, the computer fiasco of last week, and my general experience since the merger, I struggle to cite any gain from the combined UA/Continental operations. Personally, I’m increasingly connecting through IAH or EWR, neither of which are expedient routing for most of my travel. I’ve have found myself on smaller and smaller aircraft (I really don’t understand using CRJ-700s on any flight over two hours yet it was the main aircraft for SFO – MSP routing last winter). And, I’m hard pressed to find many new-UA employees who seem to enjoy their jobs or want to foster a positive customer experience. (There was one exception … the 5th customer service rep we talked on July 8th. He was truly helpful and looked up whether there was a curfew at SFO, saying it was conceivable a flight could leave at 3am instead of being cancelled).
It seems like competition has decreased, fares have increased, flights are increasingly late for reasons other than weather, and both employees and customers are grumpy. Was there any customer facing benefit from the UA/Continental merger??
I think the consolidation was necessary – the airlines lost billions over the years…
Now, with competition reduced, the government should give foreign airlines 8th freedom rights in the US – I would love to fly SQ or LH coast-to-coast or on other domestic routes! They could target routes only served by one or two domestic carriers to increase competition or airports controlled by one airline! It would offer some higher-quality products and could bring down prices as well!
MSP has had a few brief moments of decent fares to select cities, but overall this is a pretty expensive market. The airport authority justifies it in part by saying there is an economic value to a large nonstop selection – which I think is true for some business travelers.
But with the exception of Chicago and Denver, our “Southwest effect” has, I believe, been to make Southwest more profitable (in and of itself not wrong, but their fares are often remarkably up there with Delta).
Spirit is increasing their presence but their schedule is thin and their service (and their fee structure) make them a very mixed offering.
So which way do you like it? You laugh at the airlines when they struggle. You scream in pain when they make a profit. You forget their low fares. Just be a smart consumer and buy air tickets like you buy a piece of steak. Walk away or buy lamb when pricey and buy double when it is cheap. Let’s hear some polite applause for capitalism and competition. We could be stuck with something like nice, regulated, government owned Air India. Namaste.
Mergers were a great idea. There will be no more mergers.
the biggest mistake the U.S. Government made was allowing these airlines to merge and become these mega airlines that screw us all.
If I hear anyone else back some big company and that includes cable companies like Comcast I will scream.
We can’t allow these mergers anymore.
I haven’t seen a fare below $650.00 in forever. I am pro deregulation but when you have a fixed commodity (i.e. Gates and slots) there is an issue. In ATL the ATL airport management hasn’t done anything of significance to bring in domestic carriers (JetBlue and the like). They have talked about international carrier deals but ATL isn’t a destination city it is a connection city. If your partner US DOMEMESTIC carrier isn’t here why come? The rub comes down to who controls the gates and slots. Most majors have the slots (JFK and ORD exceptions) to work with but local kowtowing of the politicians to the local Major rules. Since it doesn’t directly effect most voters nothing changes. I do realize it is a complex industry but capitalism and free enterprise still rule.
The result of deregulation and the mergers has resulted in the powers of the now defunct CAB to set fares have been transferred to the CEO’s of the four largest airlines. American deferring new aircraft, now Delta canceling orders for 90 737-900 and E-190. Talk about being bold about controlling the number of seats. Then we have the fees, which pretty soon will require passengers to pay to use the restrooms. This outcome was predicated during the debate regarding deregulation that only a few airlines will survive.