U.S. DOT, DOJ Scrutinize Competition In Air Travel

Describing a goal to identify and remove barriers, the U.S. Transportation Department (DOT) has launched a public inquiry into the state of competition in the air travel industry, alongside the U.S. Justice Department (DOJ).

“Good service and fair prices depend on ensuring that there is real competition, which is especially challenging for the many American communities that have lost service amid airline consolidation,” Transportation Secretary Pete Buttigieg said. Together, the two agencies “hope to learn more from the businesses and travelers at the center of this essential industry,” said Jonathan Kanter, Assistant Attorney General of DOJ’s Antitrust Division. Feedback gathered from passengers, pilots, analysts, airlines, trade groups and others “will ensure the Justice Department can continue to build on its historic efforts to protect competition in air travel,” he said.

DOJ pointed to recent successful lawsuits it levied against JetBlue Airways as examples of protecting competition in the industry, cases that dismantled the LCC’s proposed merger with Spirit Airlines and its Northeast Alliance with American Airlines. DOT has stepped up its own enforcement actions in recent years, and in September it required concessions from Alaska Airlines and Hawaiian Airlines in granting recent approval for their merger. It is the first combination of major U.S. airlines to be approved since 2016, a deal DOJ also allowed to proceed.

Issuing a request for information on Oct. 24, the agencies are now soliciting information “on consolidation, anticompetitive conduct and a wide range of issues affecting the availability and affordability of air travel options” from “interested individuals and organizations.” Respondents are invited to answer a series of questions on airlines, airport access, aircraft manufacturing, sales channels, rewards programs, labor issues, and more. Several of the queries seek details about the impact of past industry mergers.
The comment period will close on Dec. 23.

Calling the announcement the latest in a “long line of disappointing political stunts," the U.S. Travel Association refuted the need for such an inquiry, suggesting that time and investment could be better spent on other issues.

“Airfares are at new lows and air travel demand is at historic high,” the non-profit advocacy group said. “Yet air travel could be improved—by investing in technology, funding airport improvements and addressing the shortage of 3,000 air traffic controllers.”

Airlines For America (A4A), a trade association representing major U.S. airlines, said it “look[ed] forward to sharing with government their own data that shows just how competitive the industry is.”

Describing the U.S. airline industry as having “never been more competitive,” A4A added, “this administration’s regulatory overreach has disproportionately hurt ULCCs and disadvantaged those who can least afford air travel.”

Airline competition is also under scrutiny in Canada, where the national Competition Bureau has launched similar action, asking the country’s largest two airlines in early October to provide any relevant records and answer questions. Air Canada currently has a 42.4% share of domestic system seats in the country, followed by WestJet with 29.1% and Porter Airlines with 9.7%, according to CAPA data for the week commencing Oct. 21. In the U.S., the four largest airlines cumulatively have a nearly 80% share of domestic system seats according to the data, split between American Airlines (22.5%), Southwest Airlines (20.9%), Delta Air Lines (19.6%), and United Airlines (16%). Alaska is fifth, with 4.9%.