Open Markets Proposes Set of Reforms to Transform the Airline Industry
Open Markets Institute submitted a comprehensive comment letter to the Justice Department (DOJ) and Department of Transportation (DOT), outlining actionable steps to address the ongoing decline in the airline industry and air travel experience.
Key Issues in the Airline Industry Crisis
Open Markets highlights that the deregulation of the airline industry, coupled with weak antitrust enforcement, has created a perfect storm of challenges:
Deregulation has unleashed destructive competition, destabilizing the industry, degrading the flying experience, reducing air service to middle America, and worsening conditions for airline workers.
Subsequent lax antitrust enforcement has resulted in a monopolized industry where market power enriches CEOs and financiers at the expense of consumers, workers, and the public interest.
“While recent DOJ and DOT actions to address antitrust and passenger experience issues are welcome, a permanent solution requires re-regulation,” said Arnav Rao, transportation policy analyst at the Open Markets Institute. “Restoring common carriage principles*, ensuring equitable pricing and service terms, and stabilizing the industry’s financial viability are critical to creating an airline sector that serves broad public purposes.”
Harms of Consolidation and Deregulation
Decades of deregulation and merger-driven consolidation have caused:
Elimination of routes, especially to small and mid-sized cities,
Increased delays, mishandled baggage, denied boardings, and rising ancillary fees,
High prices at monopolized hub airports and in regions without low-cost carriers,
Job and benefit cuts, along with two-tier labor systems.
The Biden administration has taken significant steps to address these crises, including blocking anticompetitive mergers and proposing rules to enhance the passenger experience. However, Open Markets emphasizes that much more must be done.
Proposed Solutions: A Three-Pronged Approach
The DOJ and DOT can act decisively under current law to protect the public by focusing on three core areas:
Prevent Further Consolidation
Block mergers that increase market concentration nationally or locally.
Cap the percentage of flights a single airline can control at major hubs to reduce prices and improve service.
Proscribe Anticompetitive Practices
Amend FAA rules to ensure fair access to airport infrastructure, such as takeoff slots and gates.
Address predatory pricing that stifles competition, particularly from smaller carriers.
Investigate potential abuses of majority-in-interest clauses and other anti-competitive tactics.
Enhance the Passenger Experience
Finalize proposed rules on family seating and accommodations for passengers with disabilities.
Require airline interlining to improve rebooking for canceled or delayed flights.
Investigate deceptive practices related to loyalty points systems, including devaluations and hidden fees.
*The comment notes that Congress is required to restore common carriage laws.
A Vision for the Future
In an article for The Washington Monthly titled “Make Transportation Fair Again,” Open Markets Policy Director Phillip Longman underscores how deregulation in airlines, freight rail, and trucking has led to declining service levels, price discrimination, and rising carbon emissions. By restoring fairness and stability to transportation markets, the U.S. can build a cleaner, more efficient, and equitable economy.
Longman has been at the forefront of advocating for market reforms in transportation and other industries. His groundbreaking work includes co-authoring a 2012 report with FTC Chair Lina Khan, highlighting the urgent need to address monopolistic practices across sectors.
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