Monday, July 27, 2015

Flight cuts haven't been distributed
equally. In the past decade, the U. S. airline
industry's landscape shifted from nine large airlines to four mega-carriers
that make up a combined 80% of all U. S. flights. One consequence of the
industry's consolidation is a cut-back in flight schedules over the past
four years that has resulted in an approximately 7% decrease in overall
flights, according to a Wall Street Journal report. The flight cuts
haven't been distributed equally. Airports that are frequently used as hubs
to connect flights rather than as final destinations — such as Memphis and
Cleveland — saw the number flights shrink 66% and 44. 6%, respectively. The
shrinkage, and even the closure of hub operations, means fewer connecting
flight options for passengers, leaving the pricier, non-stop tickets up for
sale. The second hardest hit airport after Memphis: Newport News in
Virginia, which experienced a flight schedule shrinkage of 51%, in part due to
Southwest's cancellation of service to the city after acquiring AirTran,
according to the Journal. Milwaukee, Cleveland, Allentown-Bethlehem-Easton,
Key West, and Colorado Springs all saw their departing flights decrease over
40% in four years. The Department of Justice notified the mega-carriers on
June 30 that it is investigating them for possible collusion in the schedule
reductions in order to boost profits. (The investigation comes less than two
years after the government approved the merger of US Airways and American
Airlines to create the world's largest airline. ) The consolidation in
airlines has been widely blamed for fare hikes. According to an Associated
Press report, a lack of competitive pressure is a major factor leading to
domestic fares growing faster than inflation. Domestic fares rose 5% over the
last decade after adjusting for inflation, not including the fees piled on for
baggage or preferred seats. But not everyone is convinced the
consolidation is so bad for passengers. A PricewaterhouseCoopers report in
2014 found that the mega-carriers still face competition from smaller
airlines, like low-cost carriers and ultra-low-cost carriers. A dramatic
increase in flight departures from some airports, such as St. Pete-Clearwater
and Orlando Sanford in Florida (94% and 71% jumps, respectively), underlines
that trend. According to the Journal, the increases were primarily driven by
new service from low-cost carriers. The PwC report also said that the
consolidations have made the industry more reliable and efficient, and "made
the industry's financial outlook much stronger. " That's certainly
true: across the airline industry, airlines are gearing up for record profits.
On Thursday, Southwest reported earning a record $608 million in 2015's
second quarter. United also reported a surging second quarter on Thursday,
earning $1. 19 billion, up from $789 million in the same quarter last year. A
week earlier, Delta posted second quarter earnings of $1. 49 billion — jump
of 85%. To round out the mega-carrier second quarter earning reports,
American will announce on Friday. Expect big profits. This article
originally appeared on Fortune. com. More from Fortune:
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past decade, the U. S. airline industry's landscape shifted from nine large
airlines to four mega-carriers that make up a combined 80% of all U. S.
flights. One consequence of the industry's consolidation is a cut-back in
flight schedules over the past four years that has resulted in an
approximately 7% decrease in overall flights, according to a Wall Street
Journal report.

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