The Chart That Illustrates Why More Airlines Mean Lower Prices

May 09, 2014 3:00 pm

Skift Take

This illustrates why even a lower cost carrier like Southwest shouldn’t be able to dominate one airport, like Dallas Love Field.

— Jason Clampet

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Skyscanner  / Quartz

The further to the right you are on this chart, the cheaper your flight will be. Skyscanner / Quartz

Competition is good for consumers, and Skyscanner can prove it. The airfare search engine analyzed millions of user queries and found that the more airlines fly a route from the US, the cheaper the route gets on a per mile basis.

For example, on a 2,000 mile (3,200 km) round-trip flight (roughly the distance from New York City to New Orleans and back), a US passenger could expect to spend $973 on the airfare if there was only a single airline operating the route. However, with just three more airlines, such a flight might only cost $786—a 20% discount.

Routes with few or no competitors are typically short journeys with lower demand. Shorter flights are also more expensive to operate on a per mile basis, due to airlines’ fixed costs. By comparison, international fights from the US—which are often much longer than domestic flight—shows a less dramatic price differential.

The beneficial effects of competition are the cause célèbre of flyer advocates and airline regulators, who are constantly resisting an industry bent on consolidation. In the most recent US airline merger, federal regulators forced American Airlines and US Airways to relinquish 52 daily flights to Washington DC’s Reagan National Airport and 17 daily flights to New York City’s LaGuardia Airport as part of their merger agreement.

Shutting down the flights altogether would cause an increase in prices, according to Skyscanner’s data, but regulators wanted to boost capacity at those airports—especially from low-cost airlines like JetBlue and Virgin America. A step towards more competition in the long term.

This story originally appeared on Quartz, a Skift content partner.

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