How the "big five" airlines came to dominate the skies
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Alaska Airlines' proposed merger with Hawaiian Airlines would mark the latest in a decades-long run of industry consolidation that's left travelers with just five major carriers to choose from, per an Axios analysis of Airlines for America data.
Driving the news: Today's five biggest airlines — Delta Air Lines, American Airlines, United Airlines, Alaska Airlines and Southwest Airlines — have gobbled up 42 others since 1960.
Why it matters: If Alaska's proposed Hawaiian merger is to become reality, the companies must first convince skeptical regulators that an even more concentrated industry should be allowed.
- That's a tall order. The Justice Department is already suing to prevent a planned $3.8 billion merger between low-cost rivals JetBlue and Spirit Airlines, arguing that it would harm working- and middle-class travelers.
- The JetBlue-Spirit trial wrapped up on Dec. 5; a decision is expected soon.
- Earlier this year, DOJ won a separate case aiming to break up the "Northeast Alliance" partnership between American Airlines and JetBlue.
The big picture: The number of airline mergers annually spiked in the 1980s, with a peak of six in 1986.
- Delta and American have acquired or merged with the most airlines since 1960, at 15 and 11 respectively. Alaska carries the historical DNA of another five.
- Currently, four airlines — American, Delta, United and Southwest — together control over two-thirds of U.S. domestic air travel, according to the Bureau of Transportation Statistics (BTS).
Yes, but: Several new budget carriers, like Avelo Airlines and Breeze Airways, have popped up in recent years, adding fresh competition into the mix.
Between the lines: Those opposed to airline mergers often argue they result in reduced service and higher fares.
- Yet adjusted for inflation, airfares have fallen by over 30% since 1999, per BTS.
- That said, airline revenue from baggage fees and other penalties has soared since 2007 — so much so that lawmakers have begun scrutinizing the charges.
Yes, and: Americans have spent more on flying than ever before in recent years, in part because the total number of annual domestic airline passengers has increased by over 200 million — helping airlines to post record profits.
- U.S. airlines raked in a combined $21.2 billion in net income from domestic flights alone in 2015, $13.3 billion in 2016 and $17 billion in 2017.
- Of course, airlines posted huge losses during the Great Recession, while the COVID-19 pandemic cost U.S. carriers almost $31 billion, leading the federal government to prop up the industry with a massive $54 billion bailout.
Of note: Consolidation hasn't translated into more flights getting to their destinations on time.
- The country's on-time performance for domestic flights has stagnated over the past two decades, with roughly 20% of domestic flights annually arriving late, according to BTS data.
- Issues within airlines' control caused around 5% of delays. But air carriers weren't the leading cause for holdups, as problems with the National Aviation System — meaning, air traffic control — accounted for around 6%.
