ABSTRACT
Since deregulation in 1978 the U.S. airline industry has undergone major structural changes. A series of mergers and hub-and-spoke network development have increased market concentration at major airports as well as at industry level. The industry is still being consolidated. Analysts express concern regarding the increasing market power of a few airlines, especially in route markets connected to major hub airports. There is clear evidence that major U.S. airlines attempt to solidify their market power by intensifying hub-and-spoke networks, offering commission overrides to travel agents (a system that rewards agents for directing a high proportion of their business to an airline), using skillful dynamic pricing and seat allocation techniques (scientific yield management) and frequent-flyer bonus programmes for rewarding brand-loyal customers.
