DOT: Fares Up On Short Routes

<B> DOT: Fares Up On Short Routes</B>

A report to be released by the Department of Transportation indicates that on air routes under 750 miles that do not have a low-cost airline, inflation-adjusted average fares have increased 22 percent since deregulation in 1978--a stark contrast to a 35 percent drop overall. Where low-fare competitors are present in the short haul markets, fares dropped 41 percent in the same period. Further, DOT determined that where there is no low-cost challenger at the majors' hubs, the bigger carriers do not compete with each other on price. "If limited to network hub markets served only by the larger network airlines, prices for monopoly service and 'competitive' service are virtually the same, showing that the large network airlines do not price compete with each other at their hub cities," said a draft of the report obtained by BTN.

Moreover, the report finds that the number of competitors at the city-pair level has declined dramatically since 1992. That year, 12,495 city pairs with daily traffic in the mainland states had at least two airlines competing, compared with 8,985 in 1997. The number of markets with more than two competitors has declined by 49 percent since 1989, DOT concluded.