Bloomberg News

Airline Consolidation Linked to Longer Delays in U.S. Audit (1)

April 25, 2014

Airline Delays

The relationship between the average length of a delayed flight and competition was “statistically significant and sizable,” the U.S. Department of Transportation’s inspector general found. Photographer: Chris Ratcliffe/Bloomberg

Flight delays and cancellations rose as competition between carriers declined at U.S. airports, according to a study ordered by Congress in the wake of airline mergers.

The relationship between the average length of a delayed flight and competition was “statistically significant and sizable,” the U.S. Department of Transportation’s inspector general found.

“When competition decreased, both the average length of flight delays and percentage of total flights that were late increased,” according to the report by Mitchell Behm, an assistant inspector general.

Since 2005, mergers have winnowed the number of major carriers to four: American Airlines Group Inc. (AAL:US), United Continental Holdings Inc. (UAL:US), Delta Air Lines Inc. (DAL:US) and Southwest Airlines Co. (LUV:US)

The length of time a flight was delayed increased by 25.3 percent when a market’s airline service shrank from three carriers to two, the study found. The effect on the percentage of late flights was smaller and barely statistically significant, according to the report.

A market that went from three airlines to two also had a 7 percent increase in canceled flights, according to the study.

2,500 Routes

The inspector general didn’t say why changes in airline competition may alter flight delays and cancellations. The industry is overseen by DOT and the Federal Aviation Administration.

“This type of economic analysis serves to inform FAA and the Department of Transportation about the impacts of reduced competition on airline service quality, and can be used as information in future planning to advance an efficient air traffic system for the traveling public,” the inspector general said.

With the last of the major mergers completed Dec. 9 between US Airways Group Inc. and American, the report comes too late to have an effect on the wave of airline consolidations.

The study examined more than 2,500 U.S. routes flown by 20 airlines from 2005 through 2012. The inspector general developed economic models to estimate the effects of competition on delays and cancellations.

Last year 1.27 million flights were at least 15 minutes late, or 22 percent, according to DOT’s Bureau of Transportation Statistics. Airlines canceled 96,000 flights, or 1.5 percent, according to the bureau.

To contact the reporter on this story: Alan Levin in Washington at alevin24@bloomberg.net

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net Michael Shepard, Romaine Bostick


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Companies Mentioned

  • AAL
    (American Airlines Group Inc)
    • $43.31 USD
    • -0.85
    • -1.96%
  • UAL
    (United Continental Holdings Inc)
    • $55.33 USD
    • -1.06
    • -1.92%
Market data is delayed at least 15 minutes.
 
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