Air Transport World

Hubbing revisited: market concentration at some airports is the issue that wouldn't die; a new congressional report may give the industry shivers. (hub concentration)

Market concentration at some airports is the issue that wouldn't die. A new congressional report may give the industry shivers.

A year after it testified before Congress on the subject, the U.S. General Accounting Office has released a final report that appears to bear out its preliminary finding that hub concentration has a direct effect on airline yields. At the same time, the investigative arm of Congress has challenged the validity of a study conducted on behalf of the U.S. ATA that argued that other factors have a greater effect on ticket prices at hubs. The GAO report is expected to provide new ammunition to an evergrowing number in Congress who believe that the spate of airline mergers in the mid-1980s has led to higher fares and monopoly pricing in many markets.

To prepare its report, GAO examined airline yields over a 4-year period on routes from 15 concentrated airports: Atlanta, Charlotte, Cincinnati, Dayton, Denver, Detroit, Winston-Salem, Memphis, Minneapolis/St. Paul, Nashville, Pittsburgh, Raleigh/Durham, St. Louis, Salt Lake City and Syracuse, and compared them with yields on routes from 38 relatively unconcentrated airports. GAO defined a concentrated airport as one in which one airline handled at least 60% of the passengers enplaning at that airport or two airlines handled at least 85% of the passengers. …

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