Something is happening in Georgia. The Atlanta Metropolitan Area is the 9th largest in the United States and has grown at a rate three times higher than the national median. [1] Between 2006 and 2016, only two other metropolitan areas saw a larger total increase in number of passengers boarding commercial flights. Yet in 2016 Atlanta’s sole major airport, ATL, had just over 34,000 fewer yearly departures than it did in 2006, and it lost eight direct routes over the same period; based on these two measures ATL is the 13th and 10th fastest shrinking airport.[2]
ATL is not an anomaly. Nationally there are fewer departures and direct flights than a decade ago while the total number of passengers rises. This is largely an unintended consequence of the 1978 Airline Deregulation Act. Since 1978, the airline industry has seen continued consolidation such that today just four airlines control over 65% of the domestic US market.[3] With consolidation comes less competition, allowing the industry to pursue otherwise potentially untenable business strategies. The hub-and-spoke model is an example of this: major airlines have routed more of their flights through their hub airports while decreasing their presence in other airlines’ hubs at passengers’ expense.
Returning to Georgia, Delta Airlines uses ATL as one of its hubs and is responsible for over 70% of the passenger traffic in the airport.[4] Without serious competition between airlines, ATL has lost ground in terms of total direct flights and departures. Meanwhile, Delta has increased the number of seats in its planes and the percentage of seats sold in each flight to keep pace with the growing number of passengers. The same trend appears in the national data where the median number of seats per departure has risen by 15 from 91 to 107 and the percentage of those seats occupied by passengers rose by 6 percentage-points from 74% to 81%.[5] This leaves passengers with fewer choices, increasingly crowded planes and no tenable response on the market.
The internet has made it easier for individuals and companies to work across geographic boundaries. But for personal and business purposes the internet can only go so far and there comes a point when physical meetings are necessary. The airline industry thus has a crucial role to play in the globalization of our society and economy. Unfortunately, airlines too often engage in practices that hamper this integration and the continuing trend from consolidation to competition since 1978 has only enabled them.
While reinstating pre-1978 regulations is neither a good idea nor likely possible, federal policymakers need to look seriously at the state of the airline industry and increase scrutiny on any future mergers. Strengthening and applying anti-trust laws to the industry in order to create space for smaller airlines and force greater head-to-head competition between major carriers would serve as a good first step. Otherwise crowded flights at inopportune hours without alternatives will further define domestic air travel.
