Low-cost airlines expand, keep ticket prices low

As federal officials mull a plan this week intended to bring more low-cost airlines to Reagan National Airport, a new report says those airlines gained 15 percent more passengers in the past five years and now carry 30 percent of domestic passengers.

The report by PricewaterhouseCoopers said that when low-cost carriers enter a market, that tends to drive ticket prices down. Given the competition for passengers, the report said average ticket prices have risen by just 2 percent since 2004.

“Average increases in U.S. domestic airfares continue to lag behind major cost drivers, as fare increases since 2004 have been quite modest, rising at approximately 2 percent on an annual basis, and actually decreasing when adjusted for inflation,” said Jonathan Kletzel of PricewaterhouseCoopers. “The fourth and likely last airline mega-merger in the U.S. was recently approved, and while this certainly is a historic level of consolidation, there remain other sizeable airlines serving the U.S. domestic market, pushing companies to look for new ways to remain competitive.”

That merger of American Airlines with US Airways was approved by the U.S. Department of Justice with the proviso that the new airline relinquish what would have been a 69 percent share of the flights in and out of National Airport. The airline, now known simply as American, announced this week that it would give up nonstop service from National to 17 cities. That opens the way for airlines including Southwest, JetBlue and Virgin America to bid for the vacated slots.

The report also found that arrival delays have decreased by 17 percent in the past five years, while departure delays are down by 8 percent. There have been 26 percent fewer flights canceled since 2008.

Ashley Halsey reports on national and local transportation.
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