Title: How Airline Mergers and Competition Impact Passengers? Description: The last several decades have marked a turbulent, transformative time for commercial airlines--with mergers, failed mergers, and even airlines like Spirit going out of business. What's going on with the airline industry? And what do all these changes mean for you--the passenger. We learn more from GAO's Danielle Giese and Mike Hoffman. Related work: GAO-26-107740, Airline Competition: Indicators Suggest Increased Competition the Past Two decades, but Lower-Cost Airlines Face Challenges Released: June 2026 [ START ] {Music} [ Holly Hobbs: ] Hi, and welcome to GAO's Watchdog Report, your source for fact-based, nonpartisan news and information from the U.S. Government Accountability Office--I'm your host, Holly Hobbs.The last several decades have marked a turbulent and transformative time for commercial airlines. Most recently, the industry saw the failure of Spirit Airlines, a low-cost carrier. In a new report, we looked at the trends with commercial airlines and what they mean for you, the customer. We'll learn more about this from GAO's Danielle Giese and Mike Hoffman. Danielle, Mike, thanks for joining us! [ Danielle Giese: ] Thank you, Holly [ Mike Hoffman: ] Thanks Holly [ Holly Hobbs: ] It seems like there's always a headline these days about the airline industry. There's a merger. There's a failed merger. Bankruptcies. What's going on? [ Danielle Giese: ] Well, I think what we're seeing, Holly, aligns with how the airline industry has worked historically. This is an industry that is particularly vulnerable to economic shifts, primarily because their costs are pretty inflexible. They have a labor force that is often under collective bargaining agreements. Then from there, they're dealing with the demand that shifts for a variety of reasons, be it an economic downturn, an epidemic or international conflict. So it's hard for the industry to pivot quickly when these things occur. In the short term, things such as adjusting fares and fees may occur, but customers have to be able to tolerate it. If they need to make long-term adjustments to what's going on within their operations. Airlines may consider mergers or acquisitions. [ Holly Hobbs: ] Mike, there have been mergers. What has that meant for passengers? [ Mike Hoffman: ] When airlines merge, they look at routes where previously they had independently competed, often against each other. They can eliminate those routes so they're no longer competing with each other. So, there's less competition on those routes. We found that that can lead to higher prices, less frequent flights and fewer nonstop flights. As Danielle mentioned, these merged airlines can have some additional advantages because of larger scale, that can allow them to enter additional routes, bring more competition to those routes, and bring prices down on some subset of routes. But if you look across the industry around the time that the big wave of mergers was happening, those were mostly done by 2011. That was a period of less airline capacity and increased prices for passengers. [ Holly Hobbs: ] So, Danielle, when it comes to mergers, what has it meant for the airlines themselves? [ Danielle Giese: ] They're hoping to reach more passengers and increase their operational efficiencies. But there wasn't clear evidence to actually support that that actually occurred, especially in the passenger area. And further, we're seeing in the first 5 years that efficiency was decreasing, and that was evidenced by a decrease in on-time arrivals. And so airlines were finding that it was tougher to merge workforces and information technology in those first 5 years to gain that efficiency. [ Holly Hobbs: ] Mike, we're looking at the impact of all these changes going on in the airline industry. How do we know that? How do we know what's going on? [ Mike Hoffman: ] I like to say at GAO, we do our homework. For us that started with talking to experts and stakeholders. So that's the federal agencies that oversee aviation and competition issues. It's talking to the airlines themselves. It's talking to consumer advocacy groups that represent passengers. And it's talking to analysts who track the financial condition and developments in the industry. We also identified the best existing research on consolidation,competition, mergers in the industry. We didn't stop there. We analyzed data on millions of flights across thousands of routes, across many years. We looked at how prices, competition, passenger counts evolved over those years. And that's the sort of thoroughness that makes us feel like we're confident we know how does this ultimately impact passengers? [ Holly Hobbs: ] There have been a lot of headlines, Danielle, about low-cost carriers entering or exiting this industry. What has that meant for competition and what has it meant for passengers? [ Danielle Giese: ] When low-cost carriers entered the market in the early-2000s, they were major disruptors. They provided consumers with a lot of choice at a low cost for a lot of leisure destinations domestically within the U.S. And we saw fares overall decreasing by 15% between 2007 and 2024, as a result of the entry of low-cost and ultra low-cost carriers. Networks had to respond in order to remain competitive. They started offering economy and basic economy seating at a larger amount. And some even argue that this was at below the actual cost to the network carriers to provide these services. And they were able to do this because they had diverse revenue streams, including carrying cargo, offering premium and first-class seating, and ultimately credit card programs that allowed them to generate revenue without even providing a service. Therefore, they became really tough competitors to low-cost carriers. [ Holly Hobbs: ] One of the best-known low-cost carriers was Spirit Airlines, and it went out of business. Do we know what impact that's gonna have? [ Mike Hoffman: ] I shouldn't try to predict the future, but I think our study of the industry and previous bankruptcies that led to consolidation allow us to sketch a couple scenarios about what might happen and what it might depend on. What will happen will depend on how Spirit's valuable resources are distributed in the industry. And those resources are its fleet of planes and its airport gates. So, you could see if those planes and its gates are acquired by some of the major network carriers, it could reinforce their scale advantages, make their networks more attractive, make their loyalty programs and credit card miles more attractive, and reduce competition that's brought by other airlines and ultimately increasing prices. On the other hand, if Spirit's resources--if it's gates, if its airplanes--are acquired by smaller carriers, it could give those carriers the scale to compete more effectively with the larger network carriers. [ Holly Hobbs: ] So looking ahead, what might we expect to see from airlines? [ Danielle Giese: ] Industry stakeholders have mentioned to us that low-cost carriers are starting to get more engaged in premium services. So, more legroom, as well as possibly including baggage and other benefits to your fare. And it'll be interesting to see how the networks respond then to this engagement by the low-cost carriers. Separately, GAO is starting some work related to long-term trends at airports. Among those long-term trends is extreme weather and how extreme weather may affect these airports, including flooding. And if flooding then results in delays in takeoff basically and landing it may affect airline behavior. They may not consider it profitable to go to certain airports. [ Holly Hobbs: ] Last question. What's the bottom line of our report? [ Danielle Giese: ] The bottom line is that competition has been intense over the past couple of decades, and that low-cost carriers have played a key role in that competition. [ Mike Hoffman: ] I think the history of the industry is a history of change. The industry hasn't been static. There have been shocks, there have been adaptations, mergers, new entrants. Ultimately, that dynamic response has been good for passengers. [ Holly Hobbs: ] Thank you guys. {Music} [ Danielle Giese: ] Thank you, Holly. [ Mike Hoffman: ] Thanks, Holly. [ Holly Hobbs: ] And thank you for listening to the Watchdog Report. To hear more podcasts, subscribe to us on Apple Podcasts, Spotify or wherever you listen. And make sure to leave a rating and review to let others know about the work we're doing. For more from the congressional watchdog, the U.S. Government Accountability Office, visit us at GAO.gov. [ END ]