Don't break up the airlines. Bring more in.

Still, more might well be better, although as aviation blogger Gary Leff has noted, a situation where the “50th largest aviation market [is] bloodying itself” with three or four weak players, rather than two or three strong and profitable ones, might or might not be better for consumers. Recall that Washington allowed these mergers because the industry was in a shambles due to high fuel prices and the Great Recession. Now it’s going to totally reverse course just a few year later?

Advertisement

Moreover, economists generally care more about market power than market concentration. Is the airline oligopoly really hurting consumers in systemic way? That may be tough to prove. Prices could be lower, yet ticket prices have fallen over the past three years. And U.S. carriers remain among the safest in the world, particularly oligopolists United and American.

Still, if the goal is more competition there is another option to breaking up airlines: bringing more airlines in. Let foreign airlines fly domestic routes and lift restrictions on how much foreigners can own of a domestic carrier, boosting potential competitors. And while policymakers are thinking about injecting more market forces into our air transportation system, they might want to consider privatizing our airports. It’s common among advanced economies, and studies suggest doing so leads to better performance.

Join the conversation as a VIP Member

Trending on HotAir Videos

Advertisement
Advertisement
Advertisement