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It has been a turbulent year for the U.S. airline industry. Spirit Airlines went out of business. And one of the biggest airlines, United, floated a plan to buy its rival, American. That merger has not happened, but it has revived some fundamental questions about the state of the industry, as NPR's Joel Rose reports.
JOEL ROSE, BYLINE: For better or worse, the airline industry as we know it started in the late 1970s when Congress deregulated the airlines. How it's going is a topic lawmakers in Washington are still debating almost half a century later.
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MARK HARRIS: How did that deregulation really benefit customers?
CHRIS SUNUNU: It opens up a true free market, and free market competition works without a doubt.
ROSE: That's Chris Sununu, the former governor of New Hampshire, who now heads Airlines for America, an industry trade group for the big airlines, at a hearing last month on Capitol Hill.
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SUNUNU: When I go to buy a ticket, oh, I have four or five or six carriers going from Wichita to Dallas, so now they're all competing on that exact same route. And we have more competition per route than ever before.
ROSE: But Sununu chose an interesting example to make his case.
Is there more competition than ever before in Wichita?
RACHEL MAYBERRY: Not specifically in Wichita.
ROSE: Rachel Mayberry is the air service and marketing manager at Eisenhower National Airport in Wichita. It's true that there are six airlines serving the airport, but not all of them fly directly to Dallas. In fact, only one of them does.
MAYBERRY: Dallas, your only choice is American Airlines. Now, if you're willing to do a layover somewhere, you can get to Dallas through other carriers. But if you want a direct flight from Wichita to Dallas, it's only American Airlines.
ROSE: Mayberry says most people, including her, would probably drive the 360 miles to Dallas before they would take a connecting flight through Denver or Houston or Chicago. In some ways, Wichita is typical. The four biggest U.S. airlines now control roughly 75% of the market, and they funnel a large and growing share of their flights through a handful of megahub airports. The airlines insist there's still a healthy level of competition, but critics say this level of consolidation is unprecedented and bad for consumers.
GANESH SITARAMAN: From the airlines' perspective, it makes sense. Bigger is better, and it'll be more efficient for them, even if there's a lot of drawbacks for communities and passengers.
ROSE: Ganesh Sitaraman is a professor at Vanderbilt Law School and the author of the book "Why Flying Is Miserable: And How To Fix It." He argues that much of what's wrong with flying can be traced all the way back to deregulation, including the emergence of megahub airports.
SITARAMAN: Even the experience of being in a very, very crowded airport waiting can be disorienting and frustrating to people. If you have to connect, you know, you might find yourself running a half marathon from one side of the airport to the other, you know, just to see the door close right before your flight.
ROSE: Hubs are not new. The big airlines have been structuring their business this way since at least the 1980s, and it's easy to see why. They can keep costs down by concentrating more of their operations and maintenance in one place while also giving customers more choice of destinations. Airlines say hubs are a big reason why average fares have plunged since deregulation when you adjust for inflation. Here's how Sununu described it to members of Congress last month.
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SUNUNU: In the late '70s, let's call it what it was. Basically, rich white people could fly in a plane. Right? Today, almost any American, through a variety of different ways, can afford to fly from point A to point B. We have more competition.
ROSE: But the industry's critics say fares might be even lower today if airlines were competing directly with each other more often.
MARC REMER: There's just not much competition between nonstop routes. You can just look at the data. You know, essentially, every route's a monopoly or duopoly.
ROSE: Marc Remer is a professor of economics at Swarthmore College. Before that, he worked in the Antitrust Division at the Department of Justice, where it was his job to analyze mergers, including airline mergers. Remer says the number of hubs has been shrinking, and airlines are routing more flights than ever through those fortress hubs, as they're known in the business, where one airline operates more than 70% of flights.
REMER: The hubs have become hubbier (ph) in some sense. It creates fewer overlap routes between the airlines. And when you have fewer head-to-head overlap routes, you get less competition, and that gives these airlines more market power.
ROSE: The airline industry disputes that there's less competition than there used to be. We called the trade group Airlines for America and asked them to explain why the CEO picked Wichita and Dallas as an example of a success story.
JOHN HEIMLICH: It was probably not the best choice of examples for routes, but let me just say the following. When he says more competition per route, nationally speaking, he is correct.
ROSE: John Heimlich is the chief economist at Airlines for America. He says the largest markets have more competitors per route and more nonstop flights than they did 20 or 30 years ago. And Heimlich argues that megahubs allow airlines to serve a bigger network of destinations than they could otherwise.
HEIMLICH: You are never going to have a nonstop flight between Wichita and Tokyo. But if you have nonstop flights to Dallas and Denver and Chicago, then guess what? You suddenly have one stop to a lot of places in the world.
ROSE: But wherever you're going, there's a good chance your connecting flight is at the other end of the airport. Joel Rose, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
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