Washington Still Ignores Airline Monopolies
The GAO's latest report doesn't make it past takeoff.
By William J. McGee, Senior Fellow for Aviation and Travel
The United States has an airline competition problem. We’ve gone from 12 major airlines in 2005, to six in 2025. But unfortunately, the Government Accountability Office, the agency tasked by Congress to investigate and report on such matters, is refusing to acknowledge how harmful this has been.
In a recently released report on airline “competition” completed as part of the 2024 FAA Reauthorization Act, the GAO claims Americans benefit from increased “competition” and that fares inclusive of junk fees are lower than they were 19 years ago. None of this is true. The twin effects of deregulation and dramatic concentration took a wrecking ball to airline competition.
In the spirit of the mandate that ordered this report commissioned, I reviewed the report and listed the most inaccurate things about it. I should add, in the interests of full disclosure, I was interviewed extensively by GAO investigators for this report — only to see much of what I told them dismissed or disregarded.
1) Misleading Title Indicates Incomplete Analysis
The most striking thing about the 97-page report is its mind-blowingly inaccurate title: “Airline Competition: Indicators Suggest Increased Competition in the Past Two Decades, but Lower-Cost Airlines Face Challenges”. How could anyone conclude airline competition increased over the past two decades? One way, it turns out, is to just ignore a number of facts on the ground, including by asserting “intense competition” in a rapidly shrinking market and refusing to examine how major carriers are driving smaller carriers into bankruptcy or mergers.
2) Fundamental Fallacies
Yes, the GAO’s report acknowledges how mega-mergers created the current Big Four carriers: American, Delta, Southwest, and United. But it ignores their textbook oligopoly. There is no mention of the fact that by dominating domestic air travel with an unprecedented 80% market share, that allows them to squash competition.
The report’s “Fast Facts” summary highlights GAO’s faulty thinking:
“After multiple mergers from 2008-2013, 8 domestic airlines became the ‘Big Four.’ Most studies found that in the short run, these mergers decreased competition on some routes and led to higher fares. But, domestic airfares were generally lower in 2024 than 2 decades ago.”
The fundamental fallacy here is intentionally connecting major carrier consolidation with “generally lower” airfares 16 years later. This presents two key problems:
First, virtually all airfare decreases are driven by low fare airlines. Coupling Big Four consolidation with lower fares is misleading: correlation is not causality. In this case, the issue has been studied extensively. To give one example, in 2016, MIT found low-cost carriers (i.e., JetBlue) reduce fares by 8% on average and ultra-low-cost carriers (i.e., Frontier and Spirit) reduce fares by 21% on average. Similarly, the Department of Transportation’s Domestic Airfare Consumer Reports have consistently shown fare increases are driven by loss of low fare airlines while fare decreases are driven by entry of low fare airlines. For years, these quarterly reports show the highest fare increases nationwide are on routes served only by American, Delta, and/or United.
Second, GAO stating “average inflation-adjusted estimated domestic fares” were lower in 2024 than in 2007 is problematic because DOT does not track fees that can literally double the fare. Spirit started charging for bags in 2007, kicking off the junk fee revolution for America’s airlines. Today, all domestic carriers impose dozens of fees, including charges for extra legroom, seat selection, and priority boarding. However, GAO acknowledges DOT only tracks baggage and flight change fees, thereby failing to calculate hundreds of millions in other fees annually. As a result, GAO’s findings reflect an apples-to-oranges comparison, because 19 years ago base fares included all fees.
“Average fare” also means little to those on the wrong side of average. DOT’s airfare data show the least competitive routes offer the highest fares, often but not always in rural and smaller communities. This undermines the GAO’s argument that airline competition has increased.
Finally, the GAO defines the key metrics it assessed: “fares; total number of seats offered by airlines; and market structure indicators (i.e., market share, number of effective competitors, and market concentration).” There’s no question the number of airline seats has grown, but they’re offered by fewer airlines, and heavily concentrated among the Big Four. In 2007, travelers could still fly AirTran, Aloha, ATA, Continental, Hawaiian, Midwest, Northwest, Sun Country, US Airways, Virgin America, and others. It’s absurd to suggest that on competition and consumer choice, less is somehow more.
3) Rapid Market Changes
There’s also timing problem with GAO’s study: it confines itself to data through 2024. That is, you don’t need me to tell you, almost two years ago. This decision allows the report’s authors to ignore the airline industry’s “K-shaped economy” transformation over the last 18 months, as the Big Four post record profits while smaller airlines struggle. The recent exits of Spirit through bankruptcy and Sun Country through merger further contracted the ultra-low-cost carrier (ULCC) segment responsible for reducing fares nationwide.
In our April 2026 Substack, we revealed “how the K-shaped economy came for air travel.” We analyzed economic results for all U.S. airlines between 2016 and 2025, showing how four ULCCs operating that entire decade--Allegiant, Frontier, Spirit, and Sun Country — were quite profitable prior to Covid-19, even outpacing the Big Four majors on margins. However, we also found that ULCCs (along with newer entrants Avelo and Breeze) have collectively struggled, with four of the six not consistently profitable since 2019.
We explained Allegiant and Sun Country were the only two profitable ULCCs recently, due to largely avoiding head-to-head competition with majors and favoring “underserved communities.” The irony? The Trump administration recently approved Allegiant acquiring Sun Country, thereby shrinking the ULCCs.
Yet the GAO concludes that competition has increased?
4) Mergers & Shutdown
The past two decades have seen the greatest era of contraction in airline history. During a brief four-year period (2009-2013), the six largest became the three largest: Delta-Northwest, United-Continental, and American-US Airways all merged. This tremendously transformed U.S. air travel and established their oligopoly.
Consolidation has abounded since 2000: American-TWA, US Airways-America West, Southwest-AirTran, Alaska-Virgin America, Alaska-Hawaiian, and multiple mergers among regional carriers. To the report’s credit, the authors do acknowledge “particularly strong methodologies” have shown fares increased between 1% and 8% on routes where mergers reduced competition.
According to lobbyists at Airlines for America, shutdowns were virtually non-existent during the period of airline regulation (1938-1978). Since that time, we’ve seen literally hundreds of domestic airlines grounded, most recently Midway, Independence Air, MAXjet, Aloha, ATA, Air Midwest, and Spirit. This alone refutes GAO’s rosy assessment of increased competition.
5) No New Airlines?
It’s also bizarre GAO would point to “increased competition” during the most stagnant period in aviation history for new entrants. Since the launch of Virgin America in 2007, we’ve seen exactly two new scheduled passenger carriers: Avelo and Breeze in 2021. There’s never been a longer period without airline start-ups. Economic Liberties’ research found this dearth is largely due to big investors refusing to fund the launch of new carriers that would compete against the majors. That’s why we wrote model legislation to restrict “common ownership” of airline stocks.
6) Ignoring Predatory Pricing
A critical reason why ULCCs “face challenges” is the majors driving them out of business. In 2024 Economic Liberties published “Predatory Pricing in Airlines”, which analyzed such alleged behavior by Southwest against Hawaiian Airlines in Hawaii.
Yet the phrase “predatory pricing” doesn’t appear in GAO’s report. It’s not due to ignorance. From January 2025 through April 2026, I discussed this issue with GAO investigators and forwarded them Economic Liberties’s paper. Unfortunately, GAO didn’t actually pursue this critical competition issue, addressing the issue with only a footnote: “In some cases, competition can be robust in a highly concentrated market. This could be, for example, because an airline thinks it can drive a rival out of a given route if it lowers fares and increases capacity enough.”
7) Ignoring Small & Rural Markets
America’s regional inequality problem has become acute since 2007. In the 2024 legislation ordering the report, Congress specifically directed GAO to assess “the effect of consolidation in the United States air carrier industry, if any, on air transportation service in small and rural markets.” This directive was all but ignored, addressed in a less than two-page section containing virtually no original research or analysis.
8) Ignoring Hubs
Regional inequality also affects those living and flying in large cities no longer hosting airport hubs due to mergers. This includes major metropolitan areas such as Cincinnati, Cleveland, Pittsburgh, St. Louis, etc. Consider that Nashville, ranked 22nd in the country by population, lost its American Airlines hub, yet the busiest airport in the world is in Atlanta, ranked the 37th most populous city in America.
When regions lose hundreds of daily nonstop destinations and flight frequencies, former hubs are left with less competition and higher fares, thus leading to lost jobs and even lost corporate headquarters. It was noted by multiple media outlets as a factor when Chiquita moved its headquarters from Cincinnati (a hub Delta closed after its Northwest merger) to Charlotte, an American Airlines hub, in 2012. Yet, the GAO all but ignored the topic, simply noting in the report a “consumer advocate” mentioned the issue.
9) Airport Access
Another acute problem at large airports (particularly hubs) is big airlines dominating gates and other infrastructure, thereby preventing smaller ULCCs from competing. For example, in Charlotte — the most monopolized airport in America — American Airlines controls 90% of gates and available facilities, while 14 other airlines share the remaining 10%. GAO addressed gate issues but didn’t cite the Airport Gate Competition Act, a bill Economic Liberties strongly supports that would require “common use” sharing of gates and facilities.
Conclusion
The issue with the GAO report is a basic one: the GAO, is one-sided in favor of the dominant airlines. Even when they present evidence contradicting their overarching thesis that airline competition is robust, they make liberal use of words and phrases like “however” and “on the other hand.” As the title of the paper implies, they don’t see the monopoly issue that is the major factor behind much public frustration with the airlines. This Pollyanna view of the industry doesn’t serve Congress, and it certainly doesn’t serve the American people.
When will it end?