Another Day, Another Airline Merger
Alaska Airlines is looking to buy Hawaiian Airlines in the latest tie-up of carriers. But regulators aren’t sure yet if it’s a good deal for travelers, too.
Shrinking Booking Options
If there isn’t enough competition around, the market mechanisms in a particular industry may stop working properly. For consumers that could mean higher prices. That’s the concern of competition authorities that review big mergers.
And to be fair, American, Delta, United, and Southwest control two-thirds of American domestic airline travel, per the Bureau of Transportation Statistics. Of the five companies, Delta and American have acquired or merged the most, absorbing 15 and 11 competitors, respectively.
Are Mergers a Good Thing?
Some typical arguments against airline mergers are that they often result in worse service and higher prices. But surprisingly, when adjusted for inflation, average airfares have actually fallen since 1999.
However, fees for baggage and other extras have skyrocketed since 2007, suggesting airlines are making up for the drop in ticket prices elsewhere. In fact, the rise in airline fees is also under fire from lawmakers, as one of the core tenets of President Joe Biden’s cross-industry crackdown on “hidden fees”.
Whether or not this latest merger will go through remains to be seen, as regulators continue to monitor what is best for the American consumer.
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