Study says most airline routes still competitive despite consolidation

A government study says there is still healthy competition on the majority of US air routes despite mergers and consolidation in recent years.

The Government Accountability Office report published its findings into the effects of airline consolidation and concluded there was only a slight decline in overall competition on US air routes, partly due to low-cost airlines expanding quickly into busy markets.

The GAO study looked at the effect on airline mergers from 2007 to 2012, including the formation of the new Delta Air Lines Inc., United Continental Holdings Inc. and Southwest Airlines.

The analysis didn’t include the December merger of American Airlines and US Airways, which now means the four largest carriers control over 80% of domestic seats in the US.

Of the 37 busiest routes in the US, used by over 80 million passengers a year, the number of airlines with nonstop or connecting services decreased slightly to an average of 4.3 in 2012 from 4.4 in 2007.

Despite a generally stable level of competition on most of these routes, the number of flights were cut by 14% and fares increased by 4% between 2007 and 2012.

These capacity cuts and airline consolidation has seen a rise in the number of routes controlled by a single dominant airline.

The GAO study said that in 77% of all routes, a single airline had 50% or more of the market share, up from 72% in 2007.