Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, February 7, 1991 TAG: 9102070134
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
And that would hardly support the original arguments for airline deregulation - more competition, lower fares and better service for air travelers, the General Accounting Office said.
"The benefits of deregulation could be lost if the industry collapses into a tight oligopoly, controlled by a handful of firms, into which new entry is effectively precluded," said Kenneth M. Mead, the GAO's transportation specialist.
"The deterioration of the industry's financial health over the past several years has raised concern that as carriers are forced out due to bankruptcy, competition will decline and prices will rise," he said.
GAO analysts note that in the past when an air carrier doubled its market share, from 10 percent to 20 percent, prices rose nearly 9 percent, Mead said.
High levels of debt, anti-competitive marketing practices by strong airlines, soaring fuel prices, the recession and travel jitters caused by the U.S. war with Iraq have dealt body blows to much of the airline industry, contributing to a record $2 billion industrywide loss last year.
Continental and Pan American Airlines recently filed bankruptcy proceedings. Eastern Airlines, swamped by huge debts, stopped flying and is trying to sell its remaining assets.
USAir, involved in a runway crash that killed 34 people in Los Angeles last week, already was reeling from a record $454 million loss last year and is trimming staff and cutting back service to at least six California cities.
Pan Am, hit by a severe loss in international bookings because of public fears of terrorism arising from the Persian Gulf War, announced Tuesday it is eliminating 4,000 jobs.
In testimony before the House Public Works aviation subcommittee, Mead said further adverse financial pressure will be brought to bear against the nation's remaining airlines as they seek scarce cash to repair aging aircraft and to replace noisy airplanes with quieter models.
by CNB