The Impact of Airline Mergers and 

Consolidation on Air Travel Consumers 

and the Aviation Industry

Sixth Meeting of the U.S. Department of 

Transportation’s Advisory Committee for 

Aviation Consumer Protection

October 29, 2014

Rich Golaszewski

GRA, Incorporated

115 West Avenue • Suite 201 • Jenkintown PA 19046 • USA

215-884-7500 • 7 215-884-1385

* richg@gra-inc.com
How Did We Get Here?

 Industry structure has evolved since airline deregulation 

in 1978.

 New entry, bankruptcies, mergers, acquisitions, 

liquidations, etc.

 Events of September 11 had profound effect on 

industry.

 Formation of multinational alliance groups.

 Evolution of low fare carriers.

 Emergence of ultra low cost carriers.

 Financial crisis.

 Fuel price volatility (now falling?).

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Implications

 Airlines still affected by global economy and input 

prices.

 U.S. carriers need to modernize backbone of domestic 

fleet, 737’s and A320’s—requires capital.

 Airlines eliminating smaller hubs and strengthening 

remainder.

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Implications-Continued

 Costs driving shift to larger regional jets and turbo 

props.

 Fuel, crew and other costs.

 Lack of highly efficient 50 seat aircraft (advanced 

turboprop?).

 Fares rising-more unbundling via ancillary fees.

 Legacy airline focus on premium traffic (affects award 

program credits, among other factors).

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What Has Happened to Service at Airports?

 Since 2006, success is measured in who has lost the 

least amount of service (some individual airports have 

had increases).

 Financial crisis, airline consolidation, fuel costs and 

reduction in small RJ flying.

 Medium hubs appear to have largest losses (airlines 

closing or scaling back service at secondary hubs).

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What Has Happened to Service at 

Airports - Continued?

 Smaller communities also hit hard.

 Have exclusively regional jet service, except for 

LCC’s and ULCC’s.

 Less network connectivity.

 ULCC’s providing point-to-point service to large 

leisure markets.

 But U.S. has continued to increase safety via data 

sharing, technology and regulation.

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Change in Available Seats, 2001 – 2013 

Large 

Hub

-9%

Small 

Hub

-11%

Non-Hub

-17%

Medium 

Hub

-25%

DOT hub classes 

based on share 

of U.S. 

enplanements: 

Large: >1%

Med.: >.25% 

<1%

Small: > .05% < 

25%

7 Source: OAG, October of each year GRA, Incorporated 10/29/2014
GRA Economic Connectivity by Hub Group: 2006 –

2014 (Labels indicate change from previous value)

Change 

from 2006

-5.1%

-18.3%

-18.8%

-10.2%

Source: Based on non-stop, one stop and two stop flights from GRA GRACE Model 

to top 50 U.S. and 17 major foreign airports. 8 GRA, Incorporated 10/29/2014
What Can Improve Service to Consumers?

 Entry to discipline fares—which new services are 

feasible

 New start-up carriers—most ULCC’s focus on leisure 

markets

 Evolution of business models (e.g., Frontier) to 

provide network service at lower fares (have 

traditional LCC’s matured?)

 Address barriers to entry: access to key airports—

airport competition plans 

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 Many airport have excess gates

GRA, Incorporated 10/29/2014
What Can Improve Service to Consumers? 

Continued

 How to provide equitable access to most constrained 

airports

 Should lack of access trigger slot rules?

 Use new technology to increase capacity and reduce 

costs of service

 While we do not want to sacrifice efficiency, can we 

increase equity in system? (If a community is only 

served by RJ’s and it is relatively close to hub, almost 

always has its flights cancelled when TFM-CDM in use)

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Questions?

Contact Information:

RICHG@GRA-INC.COM

215-884-7500

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