Consolidation is the enemy of competition. That’s an axiom of economic theory. And it’s a truth known to any kid who was forced to cut the price of his lemonade when the neighbor opened another lemonade stand across the street.
In the post-deregulation chapter of the airline industry’s history, consolidation has been a dominant theme. Most recently, American merged with US Airways. Southwest absorbed AirTran. Delta merged with Northwest, United with Continental. TWA, Pan Am, PSA, Piedmont… the list of merged-into-oblivion airlines goes on. Today, the Big Four—American, Delta, Southwest, United—control around 85 percent of the U.S. domestic market.
Has airline consolidation gone too far? That’s the question a group of travel organizations wants Congress to address.
The group is a diverse one, including organizations representing the interests of airports, travel agents, online travel agencies, business travelers, and general travelers. In a letter to members of the Senate Committee on Commerce, Science & Transportation and the Senate Subcommittee on Aviation Operations, Safety & Security, they’ve thrown their collective weight behind the pressing need to review the current state of the U.S. airline industry:
We propose the establishment of a new national commission to closely examine the competitive landscape within the current U.S. domestic and international air travel markets, and how this impacts American jobs and businesses, local, regional, and U.S. economies, as well as U.S. and foreign customer satisfaction and choices in air travel. We urge you and your colleagues in Congress to include language in the forthcoming Federal Aviation Administration (FAA) reauthorization bill to establish this commission.
If there’s any doubt as to the group’s own views on the matter, the Travel Technology Association, one of the group’s members, puts the matter more pointedly: “Congress should establish a national commission to examine the lack of competition in the U.S. domestic air travel market, and how it impacts American jobs, local economies and businesses, and U.S. customer satisfaction and choices in air travel.”
While the airlines will vehemently deny it, the erosion of competition is as obvious to the traveling public as it is infuriating. Even as the carriers post record profits, the great majority of flyers find themselves crammed into ever-tighter seats, making the best of a bag of over-salted pretzels.
Government studies are all well and good. But how effectual are they?
Mergers can’t be undone. But shining a light on the anti-competitive and anti-consumer effects of consolidation might at least give regulators pause when it comes time to approve the next wave of proposed mergers, likely beginning with a tie-up between Frontier and Spirit.
Reader Reality Check
So, has the airline industry become over-consolidated?
More from SmarterTravel:
- Airlines to Harried Flyers: ‘Relax, Have a Pretzel’
- JetBlue Cuts Legroom, Doubles Down on Distraction
- How Did American Become the World’s Most Profitable Airline?
After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.