A Spirit of Bankruptcy in the Air

Since the Wright Brothers’ invention of the airplane, Americans have been captivated by the technology of flight. The ability to soar the skies, at speeds previously unimaginable for transportation, is one of the greatest feats of mankind. It has enabled people to visit family more frequently or embark on same-day business trips across the country. Airplanes have also played a critical role in our economy with the shipping of goods, bringing those in cold climates year-round access to tropical fruits and quality coffee beans.

Unfortunately, commercial air travel remained steeply expensive for most of the 20th century and was largely considered a luxury. Flying commercial was a special occasion, during which one wore professional attire and dined on lobster. But those times have passed. Millions of people fly every day, many doing so for work as routinely as others commute by car, bus, or train. Middle-class families once limited to 8-12 hour drives to Florida, now can vacation anywhere by taking a more affordable flight.

This all comes thanks to the growth of low-cost budget airlines — from the U.S.’s Southwest and Frontier to Europe’s controversial Ryanair and Wizz Air. Known for their à la carte luggage and beverage pricing, paired with substantially lower ticket rates, these airlines have opened business and leisure opportunities to a wider array of people than traditionally served. To ordinary American (and European) consumers, this shift in flight prices is welcomed. But lawyers and regulators from the outgoing Biden administration disagree. (RELATED: Biden’s Airline Antitrust Efforts Will Not Boost Competition)

One of the most prominent budget airlines, Spirit Airlines, is well-known for its bright yellow planes and no-frills services. Despite facing scrutiny for in-flight turbulence and strict carry-on baggage policies, many appreciate Spirit for its uniquely low-cost flights across the country. If booked with enough advance, one can fly from New York City to Miami, Fla. for as little as $27 on Spirit Airlines. Unfortunately, news broke in early November that Spirit would file for bankruptcy, becoming the first major U.S. airline to file for Chapter 11 in over a decade.

The announcement comes after the Federal Trade Commission (FTC), led by antitrust activist Chair Lina Khan, blocked an attempted merger between Spirit Airlines and JetBlue Airways earlier this year. Leaning into a preemptive judgment of mergers & acquisitions, while casting aside consumer welfare concerns, the FTC posited the Spirit–JetBlue negotiations as fundamentally monopolistic (despite the two companies being only the sixth and seventh largest airlines in the country).

More recently, the Department of Justice’s Antitrust Division (DOJ) and Department of Transportation (DOT) opened an investigation into anticompetitive behavior by air travel companies. The case initiated 12 days before the election, invites public input on various airline industry issues, including competition, past mergers, exclusionary practices, airport access, aircraft manufacturing, sales channels, pricing, rewards programs, and labor market concerns. Yet, customer satisfaction with U.S.-based airlines, and the affordability of tickets, has never been better.

The actions taken by the Federal Trade Commission, the Department of Justice, and the Department of Transportation represent the gross politicization of business that has plagued the outgoing administration. Rather than tailoring efforts to support airline safety concerns or reduce airport security wait lines, the federal government seeks to play games with the private sector by hamstringing Spirit (and, in the future, potentially its once competitors) into bankruptcy. But more regulation, legal rat mazes, and administrative bloat will not invigorate a prosperous American transportation sector.

To achieve broad, cheap, and efficient airfare across America, lawmakers should look to the benefits of airline deregulation over the past half-century. Since 1978, domestic airline fares have dropped nearly 50 percent (adjusted for inflation, including fees) with numerous choices in airlines and travel plans. Letting market forces respond to the demands of consumers, uninterrupted by petty legal fights, allows companies to deliver on what American travelers truly desire.

The incoming administration should proceed with a consumer-led approach, as opposed to the current antitrust and transportation policy. Flyers want lower costs, greater variety in destinations, and a wider range of flight availability. Endlessly demonizing the airline business has proven only to work against these goals. But these mistakes can be avoided if only we learn from the not-so-distant past.

Sam Raus, a recent graduate of the University of Miami, is a Tech and Consumer Freedom Fellow with Young Voices. Follow him on Twitter: @SamRaus1.

READ MORE:

Why the FTC Is Bad for Business

Google’s Found Guilty for Illegal Monopoly on Internet Search

Tilting at Antitrust Windmills: Department of Justice Sues Apple

 

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