Four major airlines control the skies in the United States: American, Delta, Southwest, and United. According to Investopedia, these four companies collectively dominate the skies in the US with almost a 67% market share. Because of such significant consolidation in the industry, many consider it an oligopoly preventing fair competition with smaller players. Additionally, CNBC reports air travel fares are at an all-time high, up 25% since 2021, the most significant jump since the 1980s. Here’s everything you need to know about the domestic airline oligopoly.
American Airlines holds the biggest share in the airline oligopoly.
According to Statista, American Airlines controls nearly a fifth of all domestic flights in the United States. Additionally, the company is under antitrust scrutiny amid attempts to partner with JetBlue to launch the Northeast Alliance. Reuters reports the Department of Justice sued to block the “de facto merger” of the companies’ operations in the northeast. CNBC reports American Airlines’ stock jumped almost 10% after a filing projected heightened revenue for Q4 2022.
Southwest Airlines, the second-largest company in the airline oligopoly, made headlines for canceling thousands of flights over the holidays. As a result, the company now faces an $825 million class-action lawsuit by shareholders in Texas. Southwest already faces another class-action suit by a passenger the company left stranded during the mass holiday cancelations. Though Southwest promised refunds for affected flyers, Eric Capdeville claims they received no reimbursement.
United Airlines controls Newark Airport in New Jersey.
Each of the big four airlines has near-total control of significant airports for domestic travel. For example, in 2015, United Airlines tried to acquire 24 additional takeoff and landing slots at Newark Airport. However, the DOJ prevented the acquisition citing the Sherman Antitrust Act. Additionally, they argued that United already dominated Newark Airport, as they controlled 902 slots.
Delta Airlines reported higher-than-expected earnings for Q4 2022, despite their stock falling 4.5% in the last year. In addition, CNBC reports Delta CEO Ed Bastian recently called for increasing funding for the Federal Aviation Administration after the holiday meltdown.
