Airline Consolidation Concerns Spike Along With Fare Rises

Why It Matters

The airline industry is more concentrated than ever, with four carriers controlling roughly 80 percent of domestic seat capacity, and a House Judiciary subcommittee hearing on June 24 exposed sharp disagreements over whether the Trump administration is rolling back consumer protections or pursuing sensible deregulation. The hearing became a congressional hearing roundup of competing visions for aviation policy as fuel costs soar and fares climb.

The Trump administration has rolled back Biden-era rules requiring cash refunds and upfront fee disclosure, moves that the administration says reduce regulatory burden but that critics argue harm consumers. Transportation Secretary Sean Duffy, a former airline lobbyist, called a proposed merger deal that fell through between United and American Airlines "interesting," signaling openness to further consolidation even as the industry faces mounting pressure from rising fuel costs tied to the administration's conflict with Iran.

The Big Picture

The airline industry has undergone dramatic consolidation since deregulation in 1978. Before the Airline Deregulation Act, Americans had 40 major carriers to choose from. Today, just four airlines, namely American, United, Delta, and Southwest, control over two-thirds of the domestic passenger market. Between 1978 and 2005, 162 airlines filed for bankruptcy, a stark reminder of deregulation's casualties.

The Biden-Harris administration attempted to push back against consolidation. In 2023, the DOJ sued to block a proposed $3.8 billion merger between Spirit Airlines and JetBlue, arguing it would remove a low-cost competitor from the market. A federal judge in Massachusetts blocked the merger one year later. Spirit, unable to survive without the merger, filed for bankruptcy twice and shut down operations in May.

But the Trump administration has signaled a different approach. Duffy's openness to the now-abandoned United-American proposal, which would have created a carrier controlling 34 percent of the domestic market, reflects a shift toward permitting industry consolidation. Meanwhile, the administration has rolled back Biden consumer protection rules estimated to save passengers more than half a billion dollars annually.

The congressional hearing roundup included testimony from industry representatives, economists, and legal experts grappling with these questions: Does consolidation improve efficiency or harm consumers? Should the government regulate fares and fees, or trust the market?

What They're Saying

The hearing featured sharp disagreements about the airline industry's trajectory and the proper role of government oversight.

Chris Sununu, president and CEO of Airlines for America and a former New Hampshire governor, defended industry consolidation and argued against strict consumer protection mandates. Timothy Ravich, an aviation law attorney at Tressler LLP, raised concerns about how antitrust enforcement affects industry viability.

But Nancy L. Rose, an MIT economics professor who previously served as deputy assistant attorney general for economic analysis in the DOJ Antitrust Division, offered a competing view. According to her written testimony, blocking the JetBlue-Spirit merger was sound enforcement, not overreach. Rose's academic work has long documented how airline consolidation drives up fares and reduces service quality in concentrated markets.

The tension centered on whether deregulation and consolidation have benefited consumers or harmed them. Evidence presented at the hearing showed the blocked Spirit-JetBlue merger would have raised fares by up to 40 percent on dozens of routine routes. Yet industry witnesses argued that consolidation enables carriers to invest in fleet modernization and route expansion.

Rep. Scott Fitzgerald, the Republican chair of the subcommittee, framed the hearing as examining whether regulatory overreach stifles airline competition. Democrats emphasized that the industry's extreme concentration, with legacy carriers controlling over 70 percent of gates at major airports like Atlanta and Dallas-Fort Worth, creates barriers that no amount of deregulation can overcome.

The most contentious exchanges centered on the role of infrastructure control. The FAA distributes takeoff and landing slots at seven of the nation's busiest airports largely to incumbent carriers through "grandfather rights," allowing them to own slots in perpetuity. At DCA and Chicago O'Hare, these allocations heavily favor American and United, who operate major hubs. This system, critics argued, locks out new entrants regardless of regulatory environment.

Political Stakes

The hearing stakes are significant for the Trump administration, which has staked its aviation agenda on deregulation and industry self-regulation. Duffy's openness to the collapsed United-American consolidation deal puts him at odds with congressional Democrats and consumer advocates who warn that further concentration will raise fares and degrade service.

For the airline industry, the hearing signals opportunity. Major airlines and their trade associations spent millions lobbying the Trump administration in the first nine months of 2025 to cut consumer protections, and they succeeded. The rollback of refund and fee-disclosure rules removes regulatory friction the industry has long resisted.

But the hearing also revealed vulnerability. Democrats highlighted that jet fuel prices have roughly doubled since Trump's war with Iran began, and Americans have spent nearly $450 more on fuel-related expenses since February. Airline fares are up more than 20 percent in just four months. If consumers blame the administration for rising costs, the deregulatory agenda could face political blowback.

Members of Congress have also pushed for an investigation into whether Duffy continues to improperly favor airline industry interests given his lobbying background. This scrutiny could complicate the administration's push for any further consolidation.

The Other Side

The airline industry's witnesses made a straightforward case, stating that consolidation enables investment and efficiency. Sununu argued that major carriers need scale to modernize fleets, expand routes, and weather economic shocks. The industry pointed to COVID-19, when airlines lost over $200 billion globally, as evidence that only large, well-capitalized carriers can survive systemic disruptions.

Industry representatives also challenged the premise that consolidation necessarily harms consumers. They noted that U.S. airlines carried approximately 900 million passengers in recent years and argued that deregulation has expanded access to flights and improved customer experience compared to the pre-1978 era of Civil Aeronautics Board control.

However, this argument collides with empirical evidence. The entry of ultra-low-cost carriers (ULCC) on a route reduces average fares by 20 to 30 percent, according to data presented at the hearing. The loss of Spirit Airlines, a leading ULCC, removes some of the competitive pressure that keeps legacy carriers honest on pricing.

What's Next

Congress faces pressure to address structural barriers to competition. The FAA's slot allocation system and legacy carriers' control of airport gates remain largely untouched by regulation, creating permanent competitive advantages. Some lawmakers may push for slot auctions or gate-access reforms, though such proposals face industry opposition.

The Biden-era consumer protection rules remain in legal limbo. While the Trump DOT has rolled them back, future regulatory action could reinstate them. The hearing suggests Democrats will continue pressing the issue, particularly if fuel costs and fare increases persist.

The Bottom Line

The airline industry's extreme concentration reflects not just deregulation but structural barriers, including slot systems, gate control, and capital requirements that prevent new competition. The Trump administration's openness to further consolidation, combined with rollbacks of consumer protections, represents a fundamental shift from the Biden approach, one that will test whether market forces alone can police an industry where four carriers control roughly 80 percent of the market.

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