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Have Mergers Created Monopoly Power in the Airline Industry? | View from the Wing

While there’s certainly been consolidation in the airline industry as America West acquired US Airways and then American; Delta acquired Northwest; Continental acquired United; Southwest acquired AirTran and Alaska Airlines acquired Virgin America this hasn’t led to higher prices for consumers. Government should remove barriers to competition, but it’s a stretch to suggest that the several large airlines in today’s industry constitute anything close to monopoly.

I’d point out that choosing 2010 as a starting point for airline prices – coming out of the Great Recession right before oil prices start spiking, and shortly after the introduction of first checked bag fees – is what’s doing the work here, the long run story of lower real airfares over the longer run has largely continued and first class fares are lower, too.

With oil hovering around $100 a barrel we did see airfares rise 2011-2014 but then return to long run trend, and indeed real airfares inclusive of fees were lower 2016-2018 than in 2010.

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Have Mergers Created Monopoly Power in the Airline Industry? – View from the Wing.

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