The airline industry took a decisive step toward greater concentration on Thursday with the announcement that American Airlines and US Airways had agreed to merge, forming the nation’s biggest airline. The merged airline, to be called American, leaves just three major carriers — Delta Air Lines and United Airlines too — able to offer extensive domestic and international service, a sharp contraction over the last decade.
But while airline executives argue that mergers are good for passengers because they bring more service to more destinations, some economists and consumer advocates warn that all this consolidation comes at a price for travelers.
With fewer carriers, passengers have fewer options; fares and fees are now more likely to go up, particularly for flights between midsize cities. And more cities, especially smaller ones, can expect to see further reductions in service.
“It’s much easier to have tacit collusion with just three airlines,” said George Hoffer, a transportation economist at the University of Richmond. “It’s not illegal. But it’s like having a few big people in a small boat. Anyone’s decisions tie you all together.”
Harrisburg International Airport (HIA) is doing well and traffic is up. With the price of fuel, many airlines are looking at the cost-effectiveness of their 50 passenger regional jet fleets. With todays fuel prices it has become more cost-effective to fly larger planes. Fortunately, HIA is equipped to handle larger planes.
There are 1.8 million people within an hour of HIA which makes this a sizable market. Because of this, many carriers flying into the HIA will simply start using larger planes.
Delta has seen at 50 percent increase in traffic on their DFW to HIA route due to the Marcellus Shale gas industry. Harrisburg is the hub of Pennsylvania’s state government and home to large companies like Hershey, which use air travel for business.
Airport officials are stating American Airlines bankruptcy filing will not impact travelers flying out of HIA. What American Airlines decides to do with its regional airlines will determine what the future holds for HIA, not the bankruptcy filing.
Smaller market airport like State College and Venango Regional will most likely be under scrutiny by airlines as they decide whether flying from these locations remains cost-effective. Can these smaller markets generate enough passengers to fill 70 – 100 seat planes? Time will tell.