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Overall Cost of Flying Down, but Fares for Short Trips Rise

<i> From Reuters</i>

Short air trips are substantially more expensive than before airline deregulation in cases where the airline doesn’t have competition from a low-fare competitor, according to a government analysis released Thursday.

While 20 years of deregulation had been positive overall, not all regions benefited, and by some measures, competition has declined recently, the Department of Transportation study said.

The analysis comes as the department defends its release last April of proposed airline competition guidelines to prevent unfair practices by large airlines toward new entrants.

Big airlines have painted the guidelines as a first step toward re-regulation and have gathered an impressive number of economists and former antitrust officials to speak against the proposal.

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But the department is showing few signs of backing down. “Our objective is to allow the benefits of deregulation to continue,” Transportation Secretary Rodney Slater told a group of reporters.

Slater said he welcomed the 800 comments his department had received on the issue so far.

“We will more than likely refine our guidelines,” he said, but stood by the basic findings that some big airlines had abused their power.

Slater said he was particularly concerned by instances in which large carriers had cut ticket prices and swamped markets with extra seats, only to see ticket prices return to the same or higher levels once the smaller airline was driven out.

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“That’s not good for the industry and that’s not good for consumers,” he said.

The department’s analysis says average air fares adjusted for inflation have declined by 35% since 1978 and passenger traffic has more than doubled.

But in the short-distance market of under 750 miles, when no low-fare competitor is present, average fares have risen 23% when adjusted for inflation.

Short-distance markets with low-fare competition show a 41% decrease in the average ticket price since 1978.

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The number of city-pair markets in the 48 mainland states where at least two airlines compete for traffic was down.


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