Arlington, VA — The American Consumer Institute (ACI), has submitted comments to the Department of Justice (DOJ) and Department of Transportation (DOT) in response to their Request for Information (RFI) on competition in air transportation. The comments highlight the immense consumer benefits achieved through airline deregulation, caution against regulatory missteps that could harm competition, and provide recommendations for reforms to ensure a competitive, innovative, and consumer-focused airline industry.
Airline deregulation, initiated in 1978, has transformed the industry, making air travel safer, more accessible, and affordable for Americans. Contrary to nostalgic critiques, deregulation has driven down inflation-adjusted ticket prices by 34% over the last decade, saving consumers billions annually. Today, nearly 90% of Americans have flown commercially, compared to just 49% in 1971. These outcomes underscore the success of deregulation in democratizing air travel and enhancing consumer welfare.
Despite this progress, recent regulatory actions have raised concerns. The DOJ’s decision to block the JetBlue-Spirit merger, for example, has left both airlines in financial distress, with Spirit filing for bankruptcy. This outcome highlights the unintended consequences of oversimplified antitrust actions that fail to account for the industry’s unique economic challenges, including high fixed costs and narrow profit margins.
Read the full letter here.
Key Takeaways
- Deregulation Benefits: Airline deregulation has saved consumers billions annually, reduced fares significantly, and made commercial air travel accessible to the majority of Americans.
- Regulatory Missteps: Blocking the JetBlue-Spirit merger illustrates the risks of outdated antitrust metrics, as both airlines now face financial instability, reducing competition and harming consumers.
- Reform Opportunities: Modernizing the air traffic control (ATC) system, addressing airport fee disparities, and expanding airport capacity are critical steps to fostering competition and efficiency.
- Innovation in the Industry: Airlines continue to compete and innovate through pricing strategies, differentiated services, and new technologies, such as in-flight Wi-Fi and premium offerings, enhancing the overall consumer experience.
The American Consumer Institute calls on policymakers to protect the gains of deregulation and adopt a balanced, evidence-based approach to competition in air transportation. By fostering innovation, addressing structural challenges, and modernizing regulatory frameworks, the industry can continue delivering safe, accessible, and affordable air travel to all Americans.
Read the full letter here.
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