The days of glamorous jet-setting are in the hazy past. For most of us, the current reality of air travel is one of long lines, frequent scheduling meltdowns, cramped seats and surprise fees. For anyone who has traveled since the end of the pandemic, it certainly seems that we are paying far more for far less.
What’s brought about this change? Consolidation. At the beginning of the 2000s, seven large national airlines were operating. American gobbled up USAir and TWA, United bought Continental and Delta took control of Northwest. Locally, Baltimore-Washington International Thurgood Marshall Airport was a hub for three airlines — USAir, Southwest and AirTran. Now nearly 70% of all flights at BWI are made by one airline, Southwest. At Dulles, there’s a similar ratio. Nearly 70% of its domestic flights are United.
Since the end of the pandemic, the result of this uncompetitive market domination has become clear — higher prices and lower-quality service. Both United and Southwest had weather, scheduling and software problems during the past year that caused thousands of Maryland, D.C. and Virginia residents to cancel vacations, miss family events and sleep in airports. And after a decade of airline fares becoming cheaper as adjusted for inflation, fares increased more than 30%.
Yet there is finally some pushback against airline consolidation. Right now, the United States Department of Justice and Maryland, along with five other states and the District of Columbia, are suing to block the proposed JetBlue purchase of Spirit Airlines. This is the first time an airline takeover has been challenged, and the reason is very important for travelers.
Simply put, when Spirit is in a market, its low fares force other airlines to keep their fares as low as possible. Even passengers who don’t fly Spirit benefit from Spirit being in the market. It’s this “Spirit effect” that is so threatening to the other airlines. The evidence at trial suggests that fares decrease by as much as 20% when Spirit is in a market. If JetBlue is successful, not only will Spirit’s low fares go away, but it’s likely JetBlue will raise fares further to pay for the acquisition.
This proposed transaction raises real concerns about the potential impact on BWI Marshall Airport. Spirit is the second-largest carrier at the airport, and JetBlue has already alluded to which airports it might prioritize. BWI, and the Baltimore region, could be one boardroom decision or one bad fiscal quarter away from what St. Louis or Memphis faced after the takeovers of TWA or Northwest — large vacant passenger airports and an exodus of regional stakeholders. The same is true with Dulles’ reliance on United. Having so much of our local flying capacity with one carrier is a risky long-term bet for our region’s economy and resilience.
And there’s another more tangible issue airline consolidation brings. As anyone who lives in my district can tell you, being so close to BWI isn’t always great. Airplane noise is a real impediment to quality of life. The tens of thousands of people in our region who live next to BWI, Reagan and Dulles understand this issue viscerally. Right now, the agency tasked with solving this issue is the Federal Aviation Administration. Unfortunately, as the market power of the airlines increased, the power of the FAA to regulate them decreased.
This inversion of government power in the face of consolidated corporate power is what political economists call “agency capture.” As concentration grows, the ability of regulators to protect the public decreases, and the receptivity of corporations to public complaints decreases along with it. If we want to solve airline issues — whether it is noise or surprise junk fees — we need less airline concentration.
We should applaud Maryland Attorney General Anthony Brown and the Justice Department’s Antitrust Division for bringing this important case, as well as President Biden for making competition policy a centerpiece of his administration. But more should be done. Local leaders and airport authorities need to diversify the offerings at our airports to ensure that residents reap the benefits of competition. Nationally, we must recognize that decades of airline consolidation benefited no one but Wall Street and work to preserve and promote competition.
With the trial now over, Judge William Young will soon make his decision. The future affordability and accessibility of flying are hanging in the balance, as are a wide range of economic impacts on our region. I hope that public interest will prevail.
Maryland Del. Jessica Feldmark represents District 12, which includes parts of Baltimore and Howard counties.
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