Airfares about to Rise Sky High

airplane price
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The major airline merger is nearly over and almost all the paperwork has been finalized. Indeed, for the two companies involved, this is great news. But can the same be said for the consumers? Probably not, not in terms of the prices anyway; in terms of routes, maybe, but as far as prices are concerned, they are going to become higher than ever before. Considering the positives, there might be an easier and more frequent access to the busy airports located near Washington and New York.

The airline merger involves two of the biggest companies in the country. According to recourses, they will no longer participate in bids which can provide more space for development to other initial airlines.

Talking from a consumer’s point of view, the deal seemingly may have benefits related to routes and destinations. On the downside, all companies whether big or small, are probably going to charge increased rates on air tickets. Industry experts put the blame on the limited number of huge enterprises that exist in the market, which would now be down to three, leaving behind all the competition in the race.

According to a merger lawyer, the airline industry previously had eight main companies. In the past decade, they have been reduced to four, and once this deal is done with, they will be down to only three. Come 2020 a large number of people will wish there were more carriers which they could utilize. A reduced number of major enterprises in any industry is a huge disadvantage because all of them enjoy more pricing power.

All predictions made do agree on the price increase. What most of them are not so certain of are the exact amounts that would be raised on specific airline routes.

If the past is looked into and the airline merger in 2008 is analyzed, it can be noted that prices were increased by almost 10% on four of the main routes. Some of the routes that were less common were cut off completely. If the same happens this time, it would not affect the merged company, but the consumers will have to suffer.

According to the analysts, consumers who use the New York and Washington airports might enjoy benefits but consumers using routes outside of these may have to face major price increase issues.

Source: www.reuters.com

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