Report: Airlines cut shorter flights

Five airlines now control about 85% of domestic flying as a result of mergers over the last decade, a new U.S. Department of Transportation report says.

In 2000, 10 airlines accounted for a little more than 90% of flying, the DOT's Office of Inspector General found.

If US Airways merges with American Airlines, as it is pushing for, that will leave the U.S. with four dominant carriers.

In its review of the aviation industry from 2008 to 2011, the Office of Inspector General says airlines are once again profitable after hitting a slump during the recession, partly because they've reduced the number of flights in order to increase demand.

Between June 2007 and June 2012, airlines reduced the number of domestic scheduled passenger flights by 13.9%. Most recently, the number of scheduled flights declined by 2.8% between June 2011 and June 2012.

In particular, airlines have cut back on the number of short flights. In June 2012, the number of domestic passenger flights of less than 250 miles was 24% lower than it was in June 2007.

The number of flights in the 250- to 499-mile range declined by 16%.

Those reductions accounted for 3,000 fewer flights per day or three-quarters of all flight reductions experienced between June 2007 and June 2012.

The hardest hit airports were located in Cincinnati, Cleveland, Memphis, Pittsburgh, and St. Louis. Combined, the five airports had a nearly 40% reduction in departing scheduled passenger flights between June 2007 and June 2012.

The report predicts that "the changes in the number of airlines controlling the industry, fare increases, and capacity reductions that began in 2008 are not a brief phase, but rather are signs of a greater shift in the industry that will remain for years to come."

Although they are once again making profits, airlines still are dealing with higher fuel prices, the report noted. Fuel expenses accounted for 35% of operating costs in 2011, near the all-time high of 40% in 2008. Fuel was just 10% of operating costs in 2001.

U.S. airlines spent $31 billion for fuel in 2011, triple what they spent in 2000.

The financial pressures have forced 51 U.S. passenger and cargo airlines to file for bankruptcy since 2000, 13 of them in 2008 alone.

Those that remain are trying to make more money by charging fees for baggage, blankets,and other amenities that used to be free.

The report cited industry association Airlines for America as saying that passenger fees increased from $3 to $22 round-trip between 2000 and 2010.

One bright spot is that delays and cancellations have dropped. At the 55 airports tracked by the Federal Aviation Administration, the percentage of flights arriving on time improved from 71% in 2007 to 77% in 2011. During the first five months of 2012, airlines have had their best on -time performance since 1988.