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AIRLINES : Studies Conflict About Fares From Hub Airports

June 07, 1989|From Associated Press

WASHINGTON — Average airline fares have decreased at most major airports, with competition increasing substantially since deregulation a decade ago, according to an industry study released Tuesday.

But another report by the General Accounting Office to be released at a Senate hearing today says airlines charge an average of 27% more per passenger mile on flights to and from 15 major hub airports than to other airports included in the study.

The airline industry report said that average fares have decreased since deregulation in 1978 and that fares at 30 hub airports are only 1.5% above the industry average. That study says hub fares are a little higher primarily because hubs tend to have more nonstop flights.

Both studies are to be discussed today at a hearing of the Commerce, Science and Transportation subcommittee on aviation, which is examining the airline practice of feeding many flights through a single airport.

The study by the GAO, the investigative arm of Congress, says competition has decreased at some airports because major airlines are dominating the market where they have hub operations.

"Many travelers have less choice among airlines as more markets are being controlled by a single airline," says an advance copy of the study obtained by Associated Press.

The report says although the number of destinations served from hub airports studied increased 10% between May, 1985, and May, 1988, most of the increases were by dominant carriers and were offset by large service reductions by other carriers.

At 13 of the 15 hubs studied, average air fares per passenger mile (one paying passenger carried one mile) were higher for dominant carriers than for other airlines serving the same airports, the report said.

"Hubbing generates important operating efficiencies, but it can also lead to substantial market power for the airlines, which could lead to higher fares and reduced levels of service," GAO official Kenneth M. Mead said in testimony prepared for the subcommittee hearing.

The industry study conducted by the aviation consulting firm of Simat, Helliesen & Eichner concludes that competition in individual markets has increased despite the greater concentration within the industry and at some airports.

The study commissioned by the Air Transport Assn., which represents major airlines, concludes that there is little, if any, relationship between average fares and airline concentration at either hub or non-hub airports.

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