Airline mergers haven't raised fares, report says

• Airfares have risen just 1.8% a year, despite mergers
• When an airline leaves a market, another will often come in
• Airlines' performance is often better than perceived, report says

The mergers that have swept the U.S. airline industry in the last decade may not have been as bad for passengers as some travel watchers predicted.

So says a new report by professional services firm PwC US, which analyzed the effect that consolidation has had on domestic fares, competition and airline performance.

There have been multiple mergers in the U.S. airline industry: US Airways and America West in 2005, Delta and Northwest in 2008, Continental and United in 2010, and Southwest's purchase of AirTran, which was completed last year.

But instead of fares dramatically rising across the board, the report's review of federal transportation data found that the average domestic ticket price rose 1.8% a year from 2004 to 2011.

That's not to say there weren't fare surges on some routes, says Jonathan Kletzel, leader of the transportation and logistics practice for PwC US.

However, he says, the perception many have that the spate of mergers resulted in a sharp increase in airfares is wrong. "We just don't see that in the data,'' he says.

The wave of mergers has also not reduced flight choices on various routes, the report says.

A look at the top 1,000 routes found that, on average, they were served by just under two competing airlines in 2004, the year before America West and US Airways joined forces, and the number remained roughly the same in 2011.

Although many cities have complained about losing carriers and higher fares as a result, Kletzel says that competition usually returns.

"You'll always be able to find individual cases and markets,'' Kletzel says, "But if you look at this (overall), the impact is either minimal or just not there.''

lf one airline exited a market after a merger, usually other big-network or low-cost carriers would enter, helping to maintain competition.

Henry Harteveldt, travel analyst at Hudson Crossing, says he wasn't surprised by the findings. Lower-cost airlines, such as Southwest, Allegiant and Frontier, are widening their footprints and tamping down fares, he says.

"What it really points out is air travel remains one of the great economic values available to the consumer,'' he says. "These value-focused airlines act as a pricing regulator.''

Big carriers, which are competing for passengers, also keep each other in check when it comes to ticket prices, he says. "There are … plenty of cities where these guys battle it out,'' he says.

Despite passenger complaints about airline service, the report notes that carriers recently have posted some of their best performance results.

In the first six months of the year, for instance, the Transportation Department reported that the industry had its lowest rate of mishandled luggage on record, at 2.97 per 1,000 fliers, the report says.