Elizabeth Warren Wants To Stop Airline Mergers, Despite Evidence That They Lower Airfares
The senator urged the Department of Transportation on Monday to regulate airline consolidation and levy heavy fines for canceled flights.
In a letter sent Monday evening, Sens. Elizabeth Warren (D–Mass.) and Alex Padilla (D–Calif.) demanded that the Department of Transportation levy heavy penalties on airlines for canceling flights. According to CNN, the letter instructs the department to "aggressively" penalize airlines that cancel flights for reasons unrelated to severe weather.
The letter proposes punishing airlines with a "hefty" fine for canceled flights, arguing that the department should act as a "consumer protection watchdog," which is legally able to fine airlines up to $37,377 per violation of federal law. According to Reuters, the senators wrote that the department should "impose fines designed to change airlines' calculus about harming consumers to pad their own profits."
This proposal comes just over a month after Sen. Bernie Sanders (I–Vt.) unveiled a similar proposal in response to airline flight cancellations. As Reason's Liz Wolfe wrote at the time, under Sanders' plan, the U.S. government would fine "$55,000 per passenger for each flight the airline must cancel due to staffing shortages" in addition to a litany of other fines for flight delays. "For flights delayed by merely one hour, Sanders wants the federal government to force airlines to give passengers refunds," added Wolfe.
However, according to CNN, Warren and Padilla's proposal contains a provision that Sanders did not include in his airline fine scheme—a demand that the Department of Transportation prevent airline consolidation. The pair frame airline consolidation as a main source of "consistent" price increases for customers.
The move is unsurprising considering Warren's consistent opposition to corporate mergers. In March, Warren introduced legislation that, if passed, would ban mergers worth more than $5 billion. Warren argued in a press release that we need to "restore our country's anti-monopoly tradition by banning the biggest, most anticompetitive mergers and giving the DOJ and the FTC stronger tools to enforce our antitrust laws and restore real competition in our markets."
Warren is wrongly blaming flight cancellations and price hikes on airline mergers, which are frequently good for consumers.
"Data on overall traffic trends supports the notion that the average flier has not been negatively affected by consolidation," the Eno Center for Transportation, a research nonprofit, found in 2017. "As the industry has consolidated and grown throughout the decades, the number of seats that are available for passenger use—available seat miles—has increased multiple times over. By some measures, the cost of domestic air travel has remained level since 2006, adjusting for inflation."
However, there is some evidence that certain mergers have led to price increases. As a 2016 data analysis by travel writer JT Genter found, "On average, airfares between former Delta and Northwest hubs increased substantially—much more than the national average—demonstrating that the Delta-Northwest merger wasn't good for hub-based flyers." Genter continued, "However, airfares between United and Continental hubs have seen much more modest increases over the last five years, and the fares have actually decreased on average over the last four years."
Current evidence, though not uniformly supportive of all mergers, points toward them being generally good for consumers. Larger airlines tend to mean more flights at similar or lower prices—especially when traveling through hubs. Even when evidence points to some mergers resulting in price hikes for consumers, Warren and Padilla's assertions that airline consolidation "routinely heaps inconvenience and abuse on consumers" are exaggerated.
Warren and Padilla's proposal would also massively increase the size of the Department of Transportation, empowering it to fine airlines and obstruct business deals. Such a plan would allow the government to intervene in the private sector with startling frequency, despite a dearth of evidence this would do anything to help consumers. However, Warren and Padilla's plan has little chance of becoming law.
The best way to make flying better is to reduce the regulations that make it so hard for airlines to fix their current pilot shortage. In 2009, regulations raised the minimum flight hours required for commercial pilots from 250 hours to 1,500 hours, causing the number of qualified pilots to fall. Despite little evidence that these regulations improve passenger safety, they remain in force. If these regulations were removed, an influx of qualified pilots could enter the workforce.
But instead of tackling those regulatory burdens that make it harder for airlines to meet consumer demand, politicians like Warren and Padilla assume that airlines are canceling flights for no real reason other than newly discovered "greed." Warren and Padilla's proposal makes no sense in light of available evidence. Current flight cancellation issues simply serve as convenient framing for regulation-happy politicians who want the government to have even more power over businesses.