American and US Air are thinking of merging, so naturally it’s time for a scare story about how mergers will lead to higher prices. Not likely.
A few years ago, there were six big airlines, but four of them–Delta & Northwest, United & Continental–merged into two. But Southwest is now one of the big four, Jet Blue is growing fast, and Alaska Airlines is growing and reaching into new markets. Meanwhile, Delta and American both carried about 5 percent fewer passengers in 2011 than they did in 2006.
Some long-time air travelers wistfully remember the days before airline deregulation, when airlines were more profitable and pampered their passengers with free in-flight meals and other amenities. They forget that, after adjusting for inflation, average fares per passenger mile were more than twice as much as they are today–about 29 cents before deregulation down to 13 cents today. (Amtrak fares, meanwhile, have gone from 21 cents to 30 cents, making trains the most expensive form of intercity travel.) As a result of the reduction in real air fares, the number of airline passengers carried each year has more than tripled since 1975.
If you want better airline service, concentrate on privatizing air traffic control, the airports, and security. A private air-traffic-control system would invest in modern equipment that would allow more planes to safely land and take off from many airports. Privatized airports would offer better service, including a wider range of airport shops and cafes at more reasonable prices. A privatized TSA would have incentives to safely move more passengers through security faster.