The Airlines Industry, Concentration and Allegations of Collusion

By Paula W. Render

In 1978, when Congress deregulated the airline industry, there were 10 airlines that provided scheduled national and international service, and those 10 accounted for 90 percent of the domestic marketplace. Today, there are four major airlines and a few smaller ones providing comparable service, and the four major airlines provide 80 percent of U.S. domestic flights. This consolidation occurred due to mergers, but also as the result of the industry’s chronic lack of profitability. The airlines have turned this dismal performance around, at least temporarily, giving rise not just to accolades for good management but also to scrutiny from the Department of Justice (“DOJ”) for potential collusion.