Recently, Transportation Secretary Sean Duffy told reporters that he’d be open to a potential merger among major American air carriers.
Just one week after the news broke, an anonymous source told news outlets that United Airlines’ CEO Scott Kirby discussed a potential merger between his airline and American Airlines with President Donald Trump back in late February, just three days prior to the start of the U.S.-Israeli war on Iran.
Eighty percent of the American passenger market is currently controlled by just four major airlines: United, Delta, Southwest and American.
The Strait of Hormuz’s closures and the increasing demand for passenger travel in the midst of the global aviation industry’s $11 billion lack of new aircraft (we’re behind globally by 17,000, thanks in part to Boeing’s many issues) have both led to rising prices, which haven’t necessarily stabilized.
Add the fact that airlines are now segmenting their price structures even more, offering things like basic, classic and extra structures that require travelers to now pay for advantages like refundable tickets, free cancellations and seat assignments, along with increasing baggage fees, and you’ve got a big problem for consumers already.
A larger monopoly would make that worse.
It’s a major tenet of capitalism to have competition (something which even the most staunchly business-forward Americans don’t seem to understand these days with the rising growth of mergers across industries, interestingly enough).
Such competition provides consumers with options, driving airlines to compete with lower prices, added amenities or prioritize their customer service to differentiate themselves from their competition.
Many of us remember when plane tickets were more reasonable, prior to the major consolidation that occurred a few decades ago, before regional airlines were absorbed into the four major American air carriers.
Are they reasonable now?
What happens when competition fades, or when the competition’s absorbed into these major corporations that practically control all of the American airspace?
When there’s no competition for customers, airlines might feel entitled to increase prices—after all, there are no other options to choose from, is there?
Yet there's a double-edged sword to monopolies: some day, airline fares might become so expensive that they outprice the ability for most Americans to purchase them, hurting the commercial aviation industry as price balloon and demand plummets.
Add the threat of AI-enabled pricing, which could analyze travelers’ individualized data to set prices that people are individually willing to pay, instead of what the current market cost is across the board, and you’ve got a big problem for the American consumer.
While there are bills currently in 20 different U.S. states looking to ban the use of algorithms and AI pricing where consumer search information is involved, the laws can’t come soon enough.
Delta came under fire last year by consumers and members of Congress for Delta’s President Glen Hauenstein’s comments that the airline’s AI can predict “the amount people are willing to pay for the premium products related to the base fares,” only to walk back on the statement promising it wouldn’t use AI to set prices based on individual’s data.
So what’s going to happen next?
In truth, none of us knows. The Trump Administration seems more than willing to prioritize big business over consumers, so it’s more likely than ever that a merger between two major American air carriers might happen—yet there’s still hope that it won’t.
As members of the travel industry, it’s important to know what’s happening within it, and how it might impact traveling Americans. Let’s get together and voice our concerns about the merger, for the more people gather together as one, the more power we as people have—in government, in advocacy, in the travel industry, and as Americans as a whole.
Corporations should not be prioritized above the American public. Let’s make our voice heard, and stop the further monopolization of the commercial aviation industry in America.
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