ATR Submits Comments Rejecting Overregulation of Airlines by DOJ and DOT

Americans for Tax Reform on Tuesday submitted comments in response to a Request for Information (RFI) by the Department of Justice (DOJ) and Department of Transportation (DOT) regarding competition in the air transportation industry.

In the comment letter, ATR described the benefits of airline deregulation for consumers and workers, the harms of costly overregulation, and the damage to consumer choice caused by unjustified overreach in antitrust investigations.

The letter first notes the history of airline deregulation:

Deregulation of air transportation was a highly bipartisan effort to remove inefficient government barriers and introduce greater free-market principles into the industry. The Airline Deregulation Act of 1978 was signed into law by President Jimmy Carter, a Democrat, and passed the House and Senate with landslide margins from legislators in both parties. These deregulatory efforts were then continued by President Ronald Reagan, a Republican.

Despite its bipartisan roots, deregulation has been unfairly maligned by some political actors today. In reality, deregulation allowed the industry to flourish, increasing availability, flexibility, and affordability for travelers. Air travel has become more accessible and more affordable for a greater number of Americans. Once a luxury only available to wealthier Americans, today Americans of all walks of life can, and do, participate in air travel.

The comments then explain how consumer prices, industry competition, and worker pay all improved in an environment with freer markets:

The cost of flying in the United States today is less expensive than ever before. According to the Bureau of Transportation Statistics, the average domestic airfare has fallen more than 35 percent since the year 1995, in inflation-adjusted dollars. Consumer choice has also improved in recent decades: The number of airline competitors for each domestic trip has increased, from 3.33 on average in the year 2000 to 3.48 on average in 2024. Airline employees have seen benefits from greater free-market policies as well, with wages in the industry growing more than twice as quickly as the U.S. private-sector average since 2010.

In contrast, consumers and workers alike are harmed by heavy-handed overregulation. Costs are passed onto consumers, which means greater government regulation will lead to higher prices for travelers. Superfluous regulation also makes it less likely for new competitors to arise. Investors are much less likely to make the massive investments necessary to establish a new airline competitor if they believe that the federal government may regulate them out of business.

The comments cite the recent case of Spirit Airlines and JetBlue to exemplify the dangers of a heavy-handed antitrust approach:

In one poignant case, DOJ sued in 2023 to block a proposed acquisition of Spirit Airlines Inc. by JetBlue Airways Corporation. Upon the final decision to block the acquisition, Attorney General Merrick Garland said the ruling was “a victory for tens of millions of travelers.” Unfortunately, within months, Spirit Airlines was forced to declare Chapter 11 bankruptcy as a result of financial difficulties and the blocked acquisition. The result of the government’s purported pro-competition policy was in fact a reduction in competition, as well as harm to employees and consumers who would have benefitted from the deal.

Historically, successful mergers and acquisitions in the airline industry have been praised across the political spectrum as being beneficial to consumer choice:

Previous approvals of merger and acquisition (M&A) activity by administrations led by presidents of both parties have led to benefits for consumers, as recognized by DOJ in the past. For example, when the Obama DOJ approved the acquisition of Virgin American Inc. by Alaska Air Group Inc. in 2016, Acting Assistant Attorney General Renata Hesse noted that the deal will allow Alaska Airlines to “use Virgin’s assets to grow its network in ways that benefit competition and consumers.” In 2008, when the Bush DOJ approved the merger of Delta Air Lines Inc. and Northwest Airlines Corporation, the Antitrust Division said that consumers were “likely to benefit from improved service made possible by combining under single ownership the complementary aspects of the airlines’ networks.”

In an environment where M&A activity is allowed to go forward, travelers themselves have reported greater satisfaction:

Consumers have spoken, and they also believe that the quality of air travel has improved. According to the American Customer Satisfaction Index (ACSI), the airline industry reached “an all-time customer satisfaction high” in 2024, reaching a score of 77 out of 100, up from a score of just 62 in 2008. This significant improvement of customer satisfaction coincided with at least 17 approved mergers and acquisitions of U.S. airlines in the intervening years.

Finally, the comments concluded by arguing that the Departments of Justice and Transportation should look toward free-market principles and the consumer welfare standard when approaching matters of competition in air transportation:

Looking to the future, DOJ and DOT should avoid costly overregulation and instead support actions that strengthen the free market and improve consumer choice in air transportation. In antitrust cases, federal agencies should return to fair implementation of the consumer welfare standard to ensure that the wellbeing of consumers is upheld and that beneficial M&A activity is not prevented. The country’s experience with air travel over the last several decades proves that free-market principles are crucial to maintaining the high standards for U.S. air transportation.

Click here to read the full letter.