Airlines Can Treat You Like Garbage Because They Are an Oligopoly

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This week, everyone is asking some variation of this question:

There is actually a pretty simple answer. Why is an armed agent of the state using violence to enforce a contract freely entered into by two private parties? Because that is more or less how you define “classical liberalism.” You may have thought that buying a ticket and boarding a plane and even sitting in your assigned seat meant you had some “right” to “fly on the plane.” Legally and contractually, you do not. (Welcome, Tweeps, to your first reckoning with the inherent contradictions in the philosophical underpinnings of laissez-faire capitalism and its conception of “coercion.”)

Of course, this isn’t how capitalism is supposed to work. This isn’t how it’s sold to us. Goons dragging bloodied passengers off of airplanes shouldn’t happen in a world where people “vote with their wallets” and corporations compete with one another to attract consumers. This is the disconnect that has puzzled so many. The first hint to the answer comes in noting that this was not an isolated incident, and that this sort of corporate mistreatment of paying customers is not limited to United.


Why do these airlines sound so unapologetic on social media? Why aren’t the CEOs apologizing? Why does no one sound contrite? This isn’t how the outrage cycle is supposed to work!


When everyone gets mad at Pepsi, Pepsi has to apologize because it is very easy to not drink Pepsi. One must affirmatively choose to drink Pepsi; not drinking Pepsi is the default option. (Though, thanks to consolidation, it’s much harder to avoid Pepsico products entirely than you might think.)

The major American airlines, though, do not need to do anything to convince people to fly with them, because they all merged and consolidated until there were just four firms controlling the vast majority of domestic flights, and they have determined that it is in their collective best interest not to seriously compete with one another.


There used to be competition, which seemed—just like we were taught in high school economics—to bring lower fares and more routes to more destinations, but the airlines weren’t making enough money, so they consolidated into a few huge carriers, reduced service to medium-sized airports, and massively raised the cost of flying through both increased fares and skyrocketing fees.

In the three decades after the U.S. deregulated the airline industry in 1978, carriers chased market share at the expense of profits, losing tens of billions of dollars over the period. From 2008 to 2014, four mergers combined eight big airlines into four: American Airlines Group Inc., United Continental Holdings Inc., Delta Air Lines Inc. and Southwest Airlines Co.


This is called oligopoly, and, for airline shareholders, this is great! It truly is a new golden age of aviation, for people who fly in private jets but own stock in airlines. For the rest of us, this is most of why flying sucks now (the rest of it is the ever-expanding and largely incompetent security state), and also why United is not that worried about you sharing that video of a man being brutally dragged off their plane. They are not embarrassed, and you will not embarrass them. Airlines feel no need to perform the dance of corporate penitence. If you’ve chosen to fly somewhere, it’s probably because you don’t have a good alternative to flying, and you may not even have a good alternative to flying one particular airline:

At 40 of the 100 largest U.S. airports, a single airline controls a majority of the market, as measured by the number of seats for sale, up from 34 airports a decade earlier. At 93 of the top 100, one or two airlines control a majority of the seats, an increase from 78 airports, according to AP’s analysis of data from Diio, an airline-schedule tracking service.


What does United care if the internet is mad at it? The airlines divvied up the sky between themselves, and if you live or work in United territory, at some point you’ll face the real “choice” offered to consumers in a post-consolidation industry: flying with them, flying a more time-consuming and circuitous route with some other, probably equally horrible airline (if such a route is available), or not flying anywhere. Do you need to get from Fargo to Denver in a hurry? Congratulations, you are now a United customer.


This is the end result of decades of corporate consolidation—aided by economists and regulators and politicians from both parties—that has greatly enriched a few at the expense of workers, consumers, and citizens in general. People chose to create a world that allows what happened on that plane to happen. Direct your outrage at the policymakers, economists, and industry cartels that created this future.