“The 30,000 Foot View: Competition and Regulation in the U.S. Airline Industry”
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House Judiciary Subcommittee on Administrative State, Regulatory Reform, and Antitrust U.S. House of Representatives
Follow its sittingsScott Fitzgerald
By blocking the transaction, regulators prevented the market from testing whether a strong competitor could emerge to challenge the industry's largest incumbents. At a minimum, the case demonstrates the importance of ensuring that antitrust enforcement promotes competition rather than merely preserving the status quo. As Congress evaluates the future of the airline industry, we should remain mindful of the lessons of deregulation. Competition, not heavy-handed regulation, has been the primary driver of lower fares, greater consumer choice, and increased innovation. In the words of the Airline Deregulation Act, the airline industry needs a "maximum reliance on competitive market forces."
Our goal should be to remove unnecessary barriers to entry, encourage robust competition, and ensure that consumers, not regulators, are the ultimate beneficiaries of airline policy. I look forward to today's discussion. I now recognize Ms. Balint for an opening statement.
Becca Balint
Thank you, Mr. Chair, and good morning. Clearly, we could not see things more differently. It's no secret that flying has gotten worse over the years. Tickets cost more, more flights are cancelled, and everything from seat selection to carry-ons are now perks that you get to pay for. This is the predictable result of a market that has been allowed to consolidate for over 60 years and an administration that continues to prioritize the demands of huge corporations at the cost of everyday Americans.
Americans were promised that consolidation would produce a more reliable, efficient, and affordable aviation system. It has done the opposite. Flyers face new and rising fees, fewer alternatives, no bargaining power, and increasing barriers to affordable travel. In 1960, before deregulation, Americans had 40 major airline carriers to choose from. Today, just four airlines control over two-thirds, two-thirds of the domestic passenger market.
We went from 40 to four. That is not competition. At the same time, airline executives argue that further consolidation is necessary to address the industry's challenges. So it was shocking to hear United Airlines, the fourth largest airline in the U.S., float a merger with American Airlines, the second largest carrier. The combined United American Airline would control 34% of the domestic market.
Transportation Secretary Sean Duffy called the proposal, quote, "interesting." This is alarming. We need to get back to antitrust enforcement on the merits. For instance, in 2024, Democrats blocked the Spirit JetBlue merger because evidence showed it would raise fares by up to 40% on dozens of routes. We knew it would cause harm to consumers who could least afford it, and even a Reagan-appointed federal judge agreed.
Spirit is gone now, not because of antitrust enforcement. Spirit is gone because of the massive spike in jet fuel costs that are a direct result of President Trump's unconstitutional war with Iran. Even the Spirit CEO said that fuel prices were the biggest factor in closing the airline. President Trump's war of choice has made it all worse. Jet fuel prices have roughly doubled since the beginning of this war.
Airlines are passing that burden directly down to passengers through higher fares, more fees, and new fuel surcharges. Americans never agreed to this war, and that's why I introduced a War Powers Resolution to end it, because Congress, not the President, has the constitutional authority to take this country into a military conflict. This unauthorized, uncalled-for war is causing a rolling series of financial blows to Americans across this country.
Americans have spent nearly $450 more on fuel-related expenses just since February. At the grocery store, food prices have gone up more than 3% since last year. At the airport, fares are up more than 20% in just four months. It's the same shock to the system over and over, coming from every direction. For a country our size, flying is not a perk.
It is how families see each other, it's how small business owners reach their customers, it's how a Vermont student gets home from college. And when the cost of flying goes up, it does not just inconvenience people, it cuts them off from what has become a necessity in this country. Instead of addressing this rapidly consolidating industry that is squeezing consumers, this administration has spent the last year pandering to the interests of their wealthy friends. The Biden Department of Transportation required airlines to provide cash refunds when customers were owed, and airlines had to disclose all fees upfront. Those policies were rolled back by the Trump DOT.
These rules were estimated to save consumers more than half a billion dollars a year. Major airlines and their trade association spent millions lobbying this administration in the first nine months, excuse me, the first nine months of 2025 to get these key consumer protections cut. So it's no surprise that the current Transportation Secretary Sean Duffy was an airline lobbyist before he took his current job. Members of Congress have pushed for an investigation into whether Duffy continues to improperly favor the interests of the industry that he used to represent. Working families across this country deserve so much better than this.
Antitrust laws are supposed to make sure the markets work for us. Americans need to know that antitrust enforcement decisions will be based on law, evidence, and the interest of regular people, not political access, background discussions, or the preferences of powerful corporations. Americans simply want choices. We don't want a handful of companies to control and limit our freedom of choice. And we don't want a federal government that approves consolidation because its corporate and political allies want it to.
They are the reasons why I will not stop stressing the importance of good rule-of-law antitrust enforcement, and I will keep pressing the current administration on their perversion of this critical tool for consumer protection. Thank you, and I yield back.
Speaker 5
The gentlelady yields back. While we wait for Chairman Jordan to arrive, I will now recognize the ranking member of the full committee, Mr. Raskin, for his opening statement.
Jamie Raskin
Thank you, Mr. Chairman, and thanks to all of our witnesses for joining us today. Spirit Airlines was once the nation's leading ultra-low-cost carrier and one of the strongest forces in the economy holding down ticket prices for consumers. It's now collapsed, and we cannot have a serious conversation about the demise of Spirit without talking about the obvious main culprit: the President's disastrous and illegal war in Iran. The Iran war has not only cost the lives of 13 American service members and thousands of Iranian civilians, including hundreds of children, it has cost American taxpayers more than $100 billion, and it's cost American consumers more than $60 billion in increased fuel costs alone, which averages to more than $470 per American household. It also caused the cost of jet fuel to double overnight, forcing Spirit to take on an extra $100 million in unexpected costs in just a couple of months.
For an ultra-low-cost carrier like Spirit, which operates on thin margins to deliver the best value to customers, that was a corporate death sentence. As Spirit Airlines explained in its legal filings, the company went under because, quote, "recent geopolitical events have resulted in a massive and sustained increase in fuel prices." But desperate to avoid any mention of Donald Trump's calamitous and historic blunder in Iran, which has split the Republican Party, my colleagues today have decided instead, somewhat comically, to blame overzealous antitrust enforcement. Americans are paying more today for groceries, gasoline, healthcare, housing, utilities, and yes, airfare. At the same time, a vanishingly small number of companies is thriving.
Consider the S&P 500, a stock market index of 500 publicly traded U.S. companies. Last month, the Financial Times published an analysis showing that just five of those 500 companies, or 1%, accounted for 50% of the growth of the index. In the airline industry, the story of lopsided growth and economic concentration is the same. In 2000, the four largest carriers controlled roughly 60% of domestic traffic. Today, they control about 80%.
One merger after another has consolidated the market power of the four major airlines: American, Delta, Southwest, and United. The result: higher prices, lower wages, growing profits. Protecting competition requires regulators willing to say no to corporate consolidation. In 2023, the DOJ blocked JetBlue's attempted acquisition of Spirit. The result: Spirit continued to operate as an ultra-low-cost airline, offering consumers lower prices than competitor airlines and driving down the price of tickets on competitors.
Economists call this, quote, "the Spirit effect." When an ultra-low-cost airline like Spirit operates a route, the price of tickets on legacy carriers like American drops by an average of 21%. As Judge Young, the Reagan-appointed judge who upheld the DOJ decision to block the Spirit-JetBlue merger, explained, quote, "If JetBlue were permitted to gobble up Spirit, at least as proposed, it would eliminate one of the airline industry's few primary competitors that provides unique innovation and price discipline. It would further consolidate an oligopoly by immediately doubling JetBlue's stakeholder size in the industry. Worse yet, the merger would likely incentivize JetBlue further to abandon its roots as a maverick low-cost carrier."
DOJ's actions in 2023 protected consumers from increased costs by forcing airlines to continue competing with Spirit and its ultra-low airfares until skyrocketing prices caused by Trump's disastrous war in Iran caused the airline to collapse. Yet our colleagues have taken the wrong lesson from this story, claiming we need less antitrust enforcement rather than more. This is alarming because under the Trump administration, antitrust enforcement has already been twisted and corrupted beyond recognition. Instead of being a tool to protect competition and innovation and to prevent companies from abusing their market power over consumers and workers, it's become just one more grift perpetrated by the president and his enablers for their own purposes of wealth maximization. Antitrust practitioners talk about a "Trump transaction tax," the recognition that merger approval depends less on objective considerations and competition factors and more on a company's willingness to curry subjective political and financial favor with the president and the money-making operation being conducted at the White House.
The warning signs of gangster-state crony capitalism are everywhere.
In the last 12 months, this administration has cleared the Nexstar-TEGNA local broadcast merger, which will undermine the diversity of independently owned news operations and which a coalition of state AGs has already obtained a preliminary injunction to halt. It has settled the Live Nation-Ticketmaster case with terms so favorable to Live Nation that the basic sweeping harms to artists, venues, and millions of fans remain largely unaddressed. It cleared the Paramount-Skydance-Warner Brothers Discovery deal before career investigators had even completed their antitrust analysis. And every senior antitrust official who has cried foul over this pattern of concentration, including Assistant Attorney General Gail Slater at Department of Justice and her principal deputy attorney general Roger Alford, has been pushed out or fired for the offense of simply doing their jobs, the jobs they signed up to do and which the law requires of them. The consequences of this anti-antitrust corruption and pro-monopoly favoritism are simple: corporations pass the Trump tax onto consumers, we pay higher prices for fewer choices, less competition, less innovation, more instability.
Instead of concocting a cover story for the president, which blames Biden for the disastrous consequences of the Trump tariff and the Trump war in Iran, we should be doing serious oversight of an antitrust enforcement system that has been thoroughly smashed up in this administration. Thank you, Mr. Chairman, and I yield back.
Scott Fitzgerald
Gentleman yields back. Without objection, all other opening statements will be included in the record. We will now introduce today's witnesses. The Honorable Chris Sununu. Mr. Sununu is the president and CEO of Airlines for America, a trade association of U.S.-based passenger and cargo airlines.
He previously served as the governor of New Hampshire and as a member of the Executive Council of New Hampshire and worked as an environmental engineer. Mr. Timothy Ravich. Mr. Ravich is a senior counsel at Tressler, where his practice focuses on aviation, aerospace, airport, and commercial litigation. He previously was the general counsel of an unmanned aerial systems company, has led research on matters affecting airspace operations and safety for the National Science Foundation and the National Academies of Science, Engineering, and Medicine, and is an author of an aviation law textbook. Mr. Christian Stout.
Mr. Stout is director of innovation policy at the International Center for Law and Economics, where his work focuses on competition, telecommunications, and artificial intelligence policy. He previously worked as an attorney, taught computer science at Rutgers University, and held various roles at technology companies. Professor Nancy Rose. Ms. Rose is the Charles P. Kindleberger Professor of Applied Economics at the Massachusetts Institute of Technology. She previously served as the deputy assistant attorney general for economic analysis in the DOJ's Antitrust Division from 2014 to 2016.
We welcome our witnesses and thank them for appearing today. We will be swearing you in at this point. Would you please rise and raise your right hand? Do you swear or affirm under penalty of perjury that the testimony you are about to give is true and correct to the best of your knowledge, information, and belief, so help you God? Let the record reflect that the witnesses have answered in the affirmative.
Thank you, please be seated. Please know that your written testimony will be entered into the record in its entirety. Accordingly, we ask that you summarize your testimony in five minutes. Governor Sununu, you may begin.
Chris Sununu
Well, good morning. Thank you very much. Great to see everybody, Chairman Fitzgerald, Ranking Member Velázquez, members of the subcommittee, I see Chairman Jordan has joined us as well. My name is Chris Sununu, I'm currently the president and CEO of Airlines for America. Thank you for inviting me today to testify on behalf of the airline industry, a sector that does support millions of U.S. jobs and drives 5% of our country's GDP.
So when examining the state of the airline industry, the defining story over the past two decades is the extensive expansion of consumer choice and travel options that continues despite significant headwinds the industry has faced, particularly over the last eight months. First, we were hit hard by two record-long government-driven shutdowns, which cost the airlines billions and the broader economy billions more. Forced flight delays and cancellations all over political fights that have absolutely nothing to do with our industry and hurt the American traveler. Also, the increase in jet fuel prices due to the closure of the Strait of Hormuz means that airlines will take an additional financial hit of more than $8 billion this year. And it's aggressive competition that prevents airlines from passing all those costs onto the consumers.
Despite these hurdles, the airline industry remains a highly dynamic marketplace where travelers enjoy a suite of fare options and unprecedented flexibility in how they choose to fly. A major catalyst for this variety has been the dramatic expansion of airline business models. 25 years ago, about 60% of domestic passengers had access to low and lower-cost carriers. These days, that has soared to 90%. And today, the average number of competitors on domestic routes sits at an all-time high, with nearly half of all passengers traveling in markets with four or more airline choices.
That range of options has never before existed for the American traveler. It does today. At a time when Americans have spent the last several years facing runaway inflation on basic household goods, competitive airline pricing has bucked that trend. Between 2019 and 2025, everyday consumer products rose by 26%. Domestic airfares fell about 3.5%.
Travelers are no longer forced into a one-size-fits-all ticket. They have the freedom to customize their journey and pay only for the services that they value. And the number of Americans flying is greater than ever before. In the 70s, about one in five Americans took a flight on any given year. Today, it's about one in two.
Airlines continue to prove themselves as an affordability success story for the American public. The best part is that according to the April 2026 ASCI survey, airlines are doing all of this with all-time high in customer satisfaction. And the recent Spirit Airlines bankruptcy, as unfortunate as that was, was just the first airline bankruptcy in the past 13 years, indicating stability for both our workforce and networks. Airlines have actively used that stability to reinvest over $24 billion annually every year back into that customer experience: the people, the product, the planes. And the upgraded products we invest in include everything from upgraded Wi-Fi and apps that give more control to the customer to better airports, better food, faster TSA screening.
The list goes on and on in terms of customer experience. And most importantly, airlines have invested in their people, doubling the average wages and benefits since 2025, far outpacing most any other industry in this country. Now, given this robust state of competition, it's clear that the biggest threat to healthy and competitive airline industry, it's our short-staffed and woefully antiquated air traffic control system. Policy makers can enhance competition not by over-regulating an already very competitive industry, but by focusing on building a new air traffic control system that'll be safer, allow for more flights, and increase choice for the consumer. Congress must build upon its $12.5 billion down payment toward air traffic control modernization with the next round of funding to ensure that technology gaps that have been completely ignored for the last 30 years, that they finally get addressed.
Air traffic modernization is one of the few policies that enjoys bipartisan, bicameral support, as well as the support of the nearly 60-member Modern Skies Coalition, consisting of stakeholder organizations across the entire country. The American traveler needs Congress to support policies that allow this competitive marketplace to thrive, prevents additional costs to the consumers, and ensures we continue to invest in the safest airspace in the world. Thank you very much. Look forward to the questions.
Scott Fitzgerald
Thank you, Governor. Mr. Ravitch, we now go to you for your five minutes.
Timothy Ravich
Good morning, Chairman Fitzgerald, Ranking Member Balint, and members of the subcommittee. Thank you for the invitation and the privilege to speak with you today. As you heard from the kind introduction, my name is Tim Ravich. I am a Florida Bar board-certified lawyer working currently with Tressler LLP, which is a law firm in Chicago. President Reagan once said that the nine most terrifying words in the English language are, "I'm from the government, and I'm here to help."
Yet one of the most important deregulatory reforms in American history was championed by Senator Edward Kennedy during the Ford administration and signed into law by President Jimmy Carter. Airline deregulation was a bipartisan effort. That spirit remains relevant today. We might agree that not every market shortcoming requires a regulatory intervention. Regulation provides benefits; it also carries costs.
Aviation depends on both competition and regulation. The title of today's hearing, "The 30,000 Foot View: Competition and Regulation in the U.S. Airline Industry," makes this point, and I think well. Every day, millions of passengers and tons of cargo travel around the United States safely and efficiently. The overwhelming majority of trips occur without incident. The success is easy to overlook.
In the nearly 50 years since enactment of the Airline Deregulation Act, passenger traffic has increased exponentially. Airfares have declined. Air travel is available to far more Americans than it was before deregulation. During the Senate hearings on airline deregulation decades ago, Senator Kennedy recalled an East Boston constituent who asked why he was holding the hearings about airlines when he had never been able to afford to fly. Kennedy replied, quote, "That's why I'm holding the hearing."
I often think of that story when I teach aviation law. At the start of each semester, I ask my students whether they have ever flown on a commercial airline. Every hand goes up. In fact, it may be the only time all semester that happens, but many seem surprised by the question itself. Of course they have flown.
That reaction says a great deal about how much aviation has changed over the last half century and how competition has expanded access to air transportation for millions of Americans. As titled, this hearing focuses on the right issue: when is regulation necessary versus when markets should work freely. The competition questions today are different from those Congress confronted in 1978. Competition today is often shaped less by fares and routes than by access, capacity, market concentration, and mergers. These issues deserve attention.
But many competition decisions in commercial aviation occur not in the air, but on the ground, at airports. A carrier cannot compete without access. Access to gates matters. Access to terminal matters. Infrastructure matters.
Competition also requires capacity. No airline can compete with a flight it cannot schedule. And no new entrant can compete without access to gates, terminals, and airport infrastructure. The same is true in the national airspace system. Airlines can only compete through flights they are able to schedule and operate.
Discussions about air traffic control modernization and capacity are therefore also discussions about competition. Recent litigation involving the proposed acquisition of Spirit Airlines by JetBlue Airways illustrates another challenge. Competition policy often requires regulators and courts to predict future markets and future competitors.
Those predictions are not always easy. As we approach the 50th anniversary of the Airline Deregulation Act, the central question before this body is whether and how regulatory law can best encourage competition, innovation, and new entry. That question extends beyond today's airline industry. Drones are here. Flying taxis referred to as advanced air mobility are on the horizon.
Commercial space transportation is a reality. The issues we will discuss today, access, competition, infrastructure, resource allocation, and yes, regulation, will influence and are precedential as our nation explores the next frontiers in transportation. I look forward to discussing these matters and answering the subcommittee's questions. Thank you.
Christian Stout
Chairman, ranking member, and members of the subcommittee, good morning. Thank you for having me. I am the director of innovation policy at the International Center for Law and Economics, and my work focuses on how law and regulation shapes competition. I have filed a longer written statement, so let me make one central point and give three examples. My central point is this: many of the most important barriers to airline competition arise from policy choices, not from the airlines themselves.
The most pro-competitive thing this Congress can do is to clear policy bottlenecks, not pile on new ones. My first example is Spirit. In January 2024, federal court blocked the JetBlue-Spirit merger to protect competition. The government won the case, and then it lost the carrier. Spirit went bankrupt twice and shut down this May, a 34-year-old airline gone, and with it the Spirit effect, the downward pressure its low fares put on every competitor in the market.
I am not here to say the Justice Department killed Spirit by itself. An engine inspection crisis, high fuel costs, and the big carriers copying Spirit's product all played a part as well. The point is narrower. The legal framework was too static for a visibly fragile firm in a capital-intensive industry, and it failed in two ways that I think are worth your attention. First, the court itself found that a stronger JetBlue would have competed harder against the big four carriers that fly most Americans, a benefit to the broad flying public.
But under the old any-market analysis of cases like Philadelphia National Bank and Topco, harm to the most price-sensitive travelers on a handful of routes controlled the entire outcome, no matter how large the nationwide benefit. The court blocked a merger it appeared to regard as good for competition overall to preserve route-level rivalry the market then itself erased. Second, the failing firm defense asks a yes or no question: is the company about to collapse with no possible buyer? Spirit could not meet that strict test in early 2024, so the court treated it as a healthy, durable competitor that would keep disciplining fares indefinitely. Eighteen months later, it was liquidated.
That is the flaw. In a capital-intensive industry shock-prone, the real question is not whether a carrier has already failed, but how likely it is to still be competing in five or ten years from now. Merger analysis for network industries needs a probability-weighted view of a firm's durability and consistent credit for out-of-market benefits. My second example is airport slots. At the most congested airports, the FAA rations every takeoff and landing through slots.
Decades ago, those slots were handed to incumbent carriers for free and locked in by grandfather rights. They function as property in a sense, bought, sold, and pledged as collateral worth tens of millions of dollars. Yet a new airline cannot simply decide to add service, and use-it-or-lose-it rules push carriers to fly near-empty ghost flights just to keep their slots. Where low-fare entry is actually allowed, fares fall about 17%. The FAA already waives these rules at times, so it plainly has the power to move toward real slot markets.
My third example is the accumulation of consumer protection mandates. Let me be clear first, I am not against protecting consumers. But airlines run on operational flexibility, the freedom to cancel, swap aircraft, rebook passengers when weather or mechanical problems hit. Every mandate that turns a judgment call into a legal obligation converts a manageable risk into a fixed cost. A wave of recent rules like automatic cash refunds, a proposed European-style compensation regime, free family seating, new fee disclosure requirements, each of these hits hardest at the unbundled ancillary revenue model that lets budget carriers like Spirit operate flexibly.
So my recommendations come down to discipline and humility. Modernize merger analysis for network industries, open underused slots to new entrants, and put every operational mandate through rigorous cost-benefit review tied to a real demonstrated problem. The competition we are missing in the industry is mostly foreclosed upstream, by runways that the government rations, by capital that it walls off, and by mandates that fall hardest on the carriers least able to bear them. Spirit's empty gates are a reminder that preserving a competitor on paper is no substitute for letting competition work in fact. Thank you, I look forward to your questions.
Thank you, Mr. Stohl. We now recognize Professor Rose.
Nancy Rose
Chairman, ranking members, and members of the subcommittee, thank you for inviting me to testify. I've spent 40 years studying competition, antitrust, and regulation, including in the airline industry, and have served as the Deputy Assistant Attorney General for Economic Analysis in the Antitrust Division. I'd like to make three points, drawing from my written testimony today. First, antitrust did not kill Spirit Airlines. Let me say that again, because I think you've heard the opposite alleged: antitrust did not kill Spirit.
Spirit's own leadership, as you've heard, identified the cause as a sudden sustained spike in jet fuel prices due to the Iran war that added hundreds of millions of dollars in costs. Instead, antitrust kept Spirit flying two years longer than if JetBlue had been allowed to complete its merger and eliminate Spirit's consumer-friendly pricing. That mattered not only to Spirit passengers, but to everyone who flies. Spirit, as you've heard, pioneered the ultra-low-cost carrier model in this country, and its presence on a route forced other airlines to lower their fares, often by 10 to 20 percent or more, what's been called the Spirit effect. For many travelers, Spirit was not a preference, it was the only air travel they could afford.
As one Spirit customer recently put it, we don't fly Spirit because we're cheap, we fly Spirit because we're broke. JetBlue never intended to preserve that model. Its own deal modeling removed seats, repainted the planes, and increased fares by 30 percent. As you've heard, after hearing that evidence, Judge Young found Spirit to be a uniquely disruptive competitor, important to a particular segment of cost-conscious customers, and he blocked the deal. That was not overreach.
That was the Clayton Act working as Congress intended. Nor was this a failing firm case. The parties did not mount that defense at trial. Spirit's executives testified that the company had a plan to return to profitability. It's difficult to predict the future, but they had a plan.
And there had been another bidder, Frontier, that management preferred because it recognized that Frontier would preserve the ultra-low-cost carrier model without the antitrust risk that JetBlue's offer presented. So when people argue the DOJ should have waved the deal through because Spirit was failing or flailing, we need to recognize the danger in that argument. It would encourage stronger rivals to rough up competitors and buy them out precisely when consumers most need those competitors to survive. Second, this is not just about airlines. Competition concerns in the airline industry are a window into a much larger problem.
Across the economy, consolidation has often left families with fewer choices and higher prices. Four firms dominate cattle buying in the US, leaving many ranchers with only a handful of buyers and Fourth of July hosts paying more for the burgers that they're grilling. Three pharmacy benefit managers control nearly 80 percent of US prescriptions. Their integration with insurers and pharmacies have forced higher prices throughout the system. Hospital systems have merged and then bought up physician practices, and recent research finds that those acquisitions raise physician prices by 15 percent with no clear improvement in quality.
These are pocketbook issues: what families pay for groceries, medicine, or doctor's visits. Strong, evidence-based antitrust enforcement is one of the tools that we have to keep competition and prices affordable, as did the FTC and a bipartisan group of state AGs when they successfully blocked the Kroger-Albertsons supermarket merger. Third, antitrust must remain vigilant and independent.
When I was at the Antitrust Division, every new employee heard the same message on day one and repeated often: antitrust is law enforcement. We call balls and strikes based on the evidence, not on personal preferences, political pressure, or who has access in Washington. But that principle has been under strain. In the last year, we've seen a very troubling pattern: senior antitrust officials fired after privately objecting to an inadequate settlement forced from above, the president personally weighing in to support a media merger, a monopolization case against Live Nation secretly settled mid-trial by senior DOJ officials and White House counsel on terms so favorable that Live Nation's share price popped 6% on the announcement. Fortunately, in that case, attorneys general from 33 states and the District leaped in to assume the litigation lead and kept the trial moving forward to a jury that found for the plaintiffs on every claim.
From the outside, it looks like there's a "justice for sale" sign hanging on the fifth floor of the RFK building. That should alarm us all, regardless of our party or our ideology. When companies believe that they can buy an outcome in Washington instead of competing on the merits, we all lose. And when antitrust becomes a tool of political favor or disfavor, the predictable environment that businesses need to invest is undermined. Surely, we can find bipartisan support for rigorous, evidence-based, politically independent antitrust enforcement that protects the American consumer, the American worker, honest businesses, and the competitive process itself.
Speaker 16
Thank you, Professor. We'll now proceed under the five-minute rule with questions. First recognize the gentleman from California, Mr. Issa, for five minutes.
Darrell Issa
Thank you, Mr. Chairman. Professor Rose, notwithstanding those political comments you made at the end of your opening statement, as a professor, would you say that the number one challenge that creates an antitrust situation is not lack of competition, but a lack or barrier to entry? In other words, if someone begins to assert some benefit from a monopoly or near-monopoly, it is in fact the barrier to entry that keeps others from coming in, whatever that barrier is. Is that a basic principle of economics and antitrust?
Ma'am, that was a yes or no, if you don't mind.
Oh, then no.
Darrell Issa
Oh, okay. Mr. Stout, I'm going to go for a differing opinion. The fact that Spirit's gates are all being sold off to competitors, is that in fact by definition as great or greater a barrier to entry than in fact the consolidation under the previously asked-for one or the other mergers would have been, meaning that the gates that were not shared, the gates that were expanded, the ability of, and we'll just take JetBlue as the example, those gates were a major factor, not the aircraft, not the pilots, all of which are important, but ultimately access to routes and bases and operations in fact are sometimes the hardest to get at the most desirable airports, isn't that true?
From my understanding, that's correct.
Darrell Issa
And so as we're looking at antitrust relative to aviation, and I'm going to go to the governor in a moment, we are looking at whether the opportunity for competition is there every bit as much as the professor's narrow theory that an entity that was losing money because they said we'd like to turn around, we hope to turn around, we have a plan to turn around, somehow was a perfectly good reason to take a money-losing airline and not sell it to an airline that might in the combination make money.
Christian Stout
Your question is allowing competitors to enter, would that have helped offset some of the concerns about that transaction, is that correct?
Correct.
I believe that's correct.
Darrell Issa
Secondly, on your opening statement, you said something I think that was very profound. Every time we in Washington or our agencies create new rules, new nice-to-have, socially interesting and responsible rules, we do not disfavor the large airlines. We in fact hurt the very entities like Spirit that want to offer a low budget and do not necessarily have the means of a United or American. Is that correct?
Yes, I believe that is correct.
Darrell Issa
Thank you. Governor, welcome. For more than 12 years, you led a state successfully. You're now looking at a myriad of companies that are struggling against international competition. Now, this is an antitrust hearing and we will focus on that more than anything else today.
If in fact the relevant market are the domestic airlines, the four plus a plethora of smaller airlines, and we ignore global giants including ones backed by their government, do we in fact almost guarantee the demise of the US-based airline industry as we know it?
Chris Sununu
You absolutely have to keep in mind that when you look at the worldwide market, you have so many actors out there that are state-sponsored, state-supported, state-subsidized. They aren't free markets and again to ignore that fact on a competitive basis would definitely be to our demise. We are competing against entire governments as individual airlines, we're effectively competing against the financial wherewithal of entire governments.
Darrell Issa
Now I'm going to touch on the same subject that I didn't get the answer I wanted from the professor on. If we, the federal government, using our ability to lean into expanding routes, modernization, and places to put the aircraft when they're on the ground, if we modernize that and make more of them available, will we inherently give an ability for entrants to new and competitive airlines?
Chris Sununu
Absolutely. I think Breeze is a good example. I don't represent Breeze, but Breeze is a fairly new airline opening up at gates that might not be traditional airports, but gate access and slot access and competition there is very important.
Darrell Issa
Thank you. Mr. Stout, with the remaining time, should this committee look at referring to the other committees of jurisdiction the idea that we do lean into that and we also look at the barriers created by overregulation, maybe even a two-tier system to allow smaller airlines to waive those large mandates?
I think that's right. I think if we find ways to introduce markets into slot access that we could have a lot of pro-competitive benefits.
Thank you. I yield back.
Speaker 11
Gentleman yields back and I'll recognize the ranking member of the full committee, Mr. Raskin, again for five minutes.
Jerrold Nadler
Mr. Chairman, thanks much. Professor Rose, as a professor, you give grades, right?
I do.
Jamie Raskin
What grade would you give the antitrust enforcers in the Trump administration today?
Give them an F?
Speaker 28
I do. I don't give that very often at MIT, but in this case, I think it's fully merited.
Nancy Rose
That we no longer have an antitrust enforcement agency at the Department of Justice that's based on principles of evidence, it seems instead to be based on principles of either who has the administration's ear or their willingness to pay.
Jamie Raskin
I saw an article a couple days ago in the Wall Street Journal titled, They Can't Fly Spirit Anymore So They're Taking the Bus Instead. It reported that Greyhound and other bus services saw passenger traffic increase 30% on the 130 routes that they had shared with Spirit. So what does that surge in bus travel say about the importance that Spirit Airlines had for air travel?
Speaker 8
I think that's exactly what I alluded to in my testimony, that Spirit is was really focused in this model of stripping down fares to be the lowest possible. And other airlines, while they're making inroads into that, do not have the same impact. So many passengers who flew on Spirit could not afford the higher fares at other airlines. As a consequence, they're either not flying or not making the trip.
Jamie Raskin
Are you basically saying that the combination of terribly foolish policy decisions like the unilateral illegal tariff war against the world and the unilateral illegal war in Iran with the consequent jump in oil and gasoline prices combined with weak antitrust enforcement is causing this massive consolidation within the business economy?
I think it's definitely contributing to it.
Jamie Raskin
What are some of the problems associated with high levels of concentration and consolidation?
Nancy Rose
So particularly when consolidation or concentration happens because you're buying up your competitors, you tend to see higher prices, lower quality, less choice for consumers. And I think that flows right through to pocketbook issues that households are facing. At the same time, you may see also workers have less ability to compete for their services with employers. And so you can also see wages going down and workers having less choice.
Jamie Raskin
Can you explain that a little bit further? I think people understand why the diminished competition is terrible for consumers, but how do workers in the industry suffer from that kind of economic concentration?
Speaker 8
So let's say we've got three employers right now that are are possible options for someone with my particular skill set. If we allow a merger between two of those, now I've only got two choices. The employers recognize that reduced competition, they don't have to compete as hard to get me to work for them, they don't have to pay me as much.
Jamie Raskin
The parties justified the merger as needed to allow them to compete better with the big four airlines, and some written testimony argues for antitrust giving these cross-market efficiencies weight in making antitrust decisions. Can you explain in simple terms what this is and whether or not you support that analysis?
Nancy Rose
Yeah, I think it's a backdoor way to reintroduce the Borkian argument, the arguments Robert Bork made, which was to try and broaden the spectrum so large, so wide, that you couldn't really enforce the antitrust laws effectively. What it's saying is we might have some consumers who benefit and some who are harmed by the merger. And instead of recognizing that the antitrust laws say a merger's illegal if it substantially reduces competition in any relevant market, we should say, well, don't worry about those consumers that are being harmed. They're they're not able to pay very much for their airfare anyway, they don't have very much income, they don't have very much demand. Let's instead protect the business travelers who would like to have the the kind of expanded JetBlue option.
It's an argument you could make, it's not what our current antitrust system says, and I think it would be an enormous mistake to go to that.
Jamie Raskin
So what would you say up until now the major antitrust decisions have been by the Trump DOJ officials who you graded F in and what are the specific effects of those decisions?
Nancy Rose
Well, we've seen we're seeing consolidation in media markets, both take Paramount Skydance, which has just been cleared, but also these local broadcast stations. That's going to increase advertising rates. It's going to reduce the diversity of views. It's going to make it more difficult for for local broadcasters to to sustain newsrooms. I think that's going to be a cost both in terms of the information that we have and in terms of the people who work in that market and in terms of people who are who are looking to that for their news and their and their information content.
In in other markets like the Ticketmaster the Live Nation Ticketmaster monopolization case, we're going to see continued abuse of consumers and higher fees.
Scott Fitzgerald
Thank you, Mr. Chair. Gentleman yields back. Now recognize gentleman from North Carolina for five minutes.
Speaker 14
Thank you, Mr. Chairman, and thank all of you on the panel for being here today. Governor Sununu, thank you for coming to testify today. And I want to take just a moment to talk about the past interactions Congress has had with the airline industry. And we've already touched on it this morning that Congress passed the Deregulation Act in 1978. And the goal was free up the airline industry from the burdensome, inefficient government boards that dictated the fares, routes, and new entry to the market.
I'd really like to know from your experience, how did the Airline Deregulation Act change the way in your mind that the airline industry is regulated and how did that deregulation really benefit customers?
Chris Sununu
Well, again, it it opens up a true free market as opposed to having the government decide what the fares are going to be and and, you know, who can have what routes. And free market competition works without a doubt. And the the proof in that is just let's go to pricing. I'm a big believer that nothing shows competition more than the price. So in in the late seventies, let's call it what it was, basically rich white people could fly in a plane, right?
Today, almost any American through a variety of different ways can afford to fly from point A to point B. We have ultra-low-cost carriers. We have multiple routes. We have more competition. If you want to go to and that's the other definition of competition that's very important here.
It's not just the overall number of carriers. It's when I go to buy a ticket, oh, I have four or five or six carriers going from Wichita to Dallas. So now they're all competing on that exact same route. And we have more competition per route than ever before. And that is allowed now, right, because they can compete freely and it's not the government saying, well, you're going to go here and you're going to go there.
So on pricing alone, it has been a game changer. On low income and everyday Americans, it's been an absolute game changer. On the ability for the airlines themselves to create their own models. You know, one of the challenges I would say that Spirit has, they had a lot of challenges and there's a lot of reasons Spirit went bankrupt. But one of the challenges was, you know, some of the bigger carriers said, you know, we're going to compete.
We're going to provide a basic economy ticket that we didn't provide before at a very low cost level. And the government doesn't get involved in the economics of that to provide more option so it isn't just one carrier for low income families or folks that don't have, you know, don't have the money to spend the extra for the extra frills. So more carriers were competing at a lower cost level. That's all because of the deregulation opportunities that came from the late seventies.
Speaker 14
So in in that same vein, in what ways would you say, I know part of this hearing is looking at when to regulate and when not to regulate or deregulate. In what ways do you think Congress, maybe specifically, could further deregulate the airline industry in order to benefit consumers?
Chris Sununu
I think yeah, I think one area where the airlines have taken a clear position. First, the airlines do a lot for their customers, right? They they put over a billion dollars of their own money in compensation. They already have massive refund policies.
And please understand there's a big difference between a refund, your flight didn't take off, you get your money back, and compensation, which is like the punitive penalty. You know, the airlines and some of the regulatory proposals that we've seen in the past basically said we're going to penalize you for acts of God. There's a huge weather storm, the plane didn't take off, you now have to provide not just a refund, but compensation on top of that, right? An airline wanted to change their tail number for certain reasons. Oh, that's a cancelled flight.
No, the flight isn't cancelled, we're just changing the tail number. No, the previous administration said no, that's going to be a count against you as a... So it's things that are out of our control, which then burden us, which ultimately those costs probably get passed down to the consumer. That's been the hardest part. We're an industry that has an average profit margin of four and a half percent.
Every dollar, virtually every dollar the airlines make go back into airports and better products and all that sort of thing. So additional regulation, right, some regulations have value, all regulations have cost, right? And so you have to understand the kind of the pros and the cons there and those costs ultimately, unfortunately, would probably have to go down to a lot to the customer. So more regulation can be very burdensome for the customer in terms of cost.
Speaker 14
Thank you, sir. Mr. Ravich, in my final minute here, I want to touch base with you on this topic of cabotage, if I may, and referring to the practice of a foreign air carrier operating between two U.S. airports. Under current law, I'm told the United States only allows for cabotage when authorized by the Secretary of Transportation. How might cabotage increase competition and benefit consumers, Mr. Ravich?
Timothy Ravich
Congressman, thank you for the question. So cabotage is a maritime term, the concept being that a foreign carrier can operate domestically. So British Airways could fly from Tampa to Toledo or something. So you would have competition, you'd have more firms in the marketplace potentially, perhaps an infusion of capital, and all of the competition that flows therefrom. The issue, of course, is what's already been referred to, which is how those carriers are subsidized or sponsored.
There's some national security concerns, but it is something worthwhile, I think, to at least explore and understand how you might get more firms into the marketplace.
Speaker 22
Gentleman yields back. We now recognize the gentlewoman from Vermont for five minutes.
Becca Balint
Thank you, Mr. Chair, and I thank the witnesses for your time today. Professor Rose, in April, Transportation Secretary Duffy said, quote, "there was still room for mergers in the aviation industry." And I want to get your take on that. Do you agree with that assessment, still room for mergers?
Nancy Rose
I think there may be, but only in a very specific part of the market. I do not anticipate that there is room, if you care about competition, for the big four to be acquiring additional carriers. But there could be an argument that two of the smaller carriers who don't have much overlap, have complementary networks, might be stronger if they merged operations. That would have to be something that you'd look at carefully at the evidence. So I wouldn't want to rule it in or out, but I think it's very important that you look at where there's room to merge, and I don't see that at the top.
Becca Balint
And I think that's an important distinction. And you have touched on this, but just to make it really clear for my constituents back home, from your perspective, what would be the effects of further mergers in an industry that's already incredibly consolidated?
Nancy Rose
I think we're just going to see higher prices. And I want to make this point, that while it is true that airfares in real terms have declined, we've seen dramatic reductions in airfares over time due to some of the benefits of opening up competition. That doesn't mean that the fares we're seeing today are as low as they might have been had we not allowed the industry to consolidate. And there is interesting economic work that's been done that suggests that the big four in particular are behaving in a much more kind of coordinated pricing, live and let live fashion that's raising airfares on routes that they compete on.
Becca Balint
And I share those concerns. I'm wondering if we could turn for a moment about low-cost and ultra-low-cost carriers, the ULCCs that people have talked about today. There's research that argues that the presence of a ULCC in a market or on a specific route decreases base fares by as much as 20%. And earlier this year, there were press reports that two ULCCs, Sun Country and Allegiant, may combine. What effect do these ULCCs play in the market and how would, you know, further consolidation among the ULCCs impact flyers across this country?
Nancy Rose
So again, I think it depends on whether they're currently competing or whether they have kind of complementary networks with not much competition. If it's the latter, they could expand their operations, maybe they operate more efficiently because of that scale and they could extend that benefit to more markets. That would be great. I think the important, you asked me how they affect markets, they do it two ways. They offer consumers who buy tickets on their on their flights much, much lower fares.
But the second is, as we mentioned before, they force incumbent airlines on the routes that they enter to reduce their fares, thus extending the benefits across a wide set of flyers, many of whom would never have purchased a ticket on a ULCC.
Becca Balint
No, I agree. I want to touch on how companies are navigating the Trump administration's antitrust approach, as it were. Antitrust defense lawyers are telling their clients they should hire lobbyists and political fixers with close connections to the White House to get their deals past antitrust enforcers. We've heard from whistleblowers like Roger Alford, who've described a pay-to-play environment in DOJ antitrust. When you were at DOJ, Professor Rose, especially in your time working on the JetBlue Spirit case, did the president ever weigh in with you or your team?
Nancy Rose
Absolutely not. In fact, we weren't even allowed to be at meetings with White House officials not related to antitrust topics, but if it was for a sector where we had an antitrust investigation going on.
Becca Balint
So from your perspective, this is outrageous. This shift is completely and totally outrageous.
Absolutely.
Speaker 18
And why is it so important that that doesn't happen, that you don't have a president interfering?
Nancy Rose
Because if we have a pay-to-play system, I think both businesses that want to operate kind of honestly and effectively and consumers all and workers all lose. We're subject to the kind of capricious whims of whoever is willing to pay more to get the outcome that they want.
Becca Balint
I agree. So, you know, I think we have bipartisan agreement in this room that air travel, maybe we do, maybe we don't, actually, now that I I listen to some of my questions from my colleagues. I would I think if you ask regular Americans, they think things aren't working very well for them in the in the flying public. And history has shown us that Congress has policy levers that we can pull here. And whether it's a return to a pre-1978 regulation model or stronger oversight or passing laws to break up these massive airlines, the traveling public wants change.
I mean, we all fly every week. I can tell you when I'm sitting in that waiting room, I don't hear people saying things are working great here, we feel really great about the state of the airlines today. So I turn to you, Professor Rose, for a final word. What should Congress do to ensure a more competitive industry going forward?
Speaker 8
I I think keep our eye on the ball with respect to antitrust and some of these arguments about how to expand infrastructure, reducing barriers to entry could be an enormous benefit.
Thank you, Professor Rose, and I yield back.
Speaker 17
Gentlelady yields back. Now recognize the chairman of the full committee, Mr. Jordan, for five minutes.
Jim Jordan
Thank you, Mr. Chairman. Mr. Stout, there are there are four big players, right? Four big airlines: United, Delta, American, and then Southwest is big but not quite as big as the other three. Is that right?
That's correct.
Jim Jordan
And then there's a second category, this this low-cost carriers and sort of in the middle. And that's people like JetBlue and and airlines like that. And then you have the super low-cost, the ultra-low-cost, Frontier, Allegiant, and others, right?
Speaker 24
Okay. And one of the guys in the middle was going to buy one of the guys in the smaller category. Is that right? JetBlue was going to buy Spirit.
That's right.
Speaker 21
Okay. By the way, what are the what are the big four, what percentage of the airline industry are the big four?
Christian Stout
About the numbers I've seen are about 75%, but I've heard 80 or a little bit lower.
Jim Jordan
So pretty big. 75, 80%.
And then the JetBlue-Spirit was going to be what percentage of the business then?
Speaker 25
I don't remember the exact number. If that merger would have happened, it was a much smaller percentage.
Yeah, but I heard like 10%.
It was something like that, yes.
Speaker 24
Okay. All right. And then, so this was proposed I think a couple years ago, like three or four years ago. And then a couple years later, it's like Justice Department sues, says no, you can't do it, this is bad, Ms. Rose says it's terrible, and it all falls apart, is that right?
That's correct.
Speaker 24
And we got this famous tweet now from Senator Warren. She said, I've warned for months that a JetBlue-Spirit Airlines merger would have led to fewer flights and higher rates. Seems to me now that Spirit's went out of business, we got fewer flights and higher rates, is that true?
I believe that is correct.
That's correct.
Speaker 24
Yeah. Ms. Rose said that she said JetBlue was going to raise prices 30%. Would raising prices 30% still be lower than the big four?
Christian Stout
It would, and it would also still provide airline service where now there's none.
Speaker 24
Right. Right. And there'd still be lots of employees at Spirit probably still working.
Christian Stout
Right. Effectively the price is infinite now because there is no option.
Speaker 24
17,000 people lost their job because the Biden DOJ said no, we don't want a middle class lower cost airline buying a super low cost airline, even if they raise prices 30% it's still lower than the big four, they would have accounted for 10% of the market and be able to compete against the 80%. What am I missing in there? Is that accurate?
No, I think that's accurate.
Speaker 24
Yeah, but the Biden administration said no, we can't do that. And Elizabeth Warren even said it's going to help consumers when today in fact because Spirit's out of business there are less fights, less flights, less people working, 17,000 people out of a job.
Christian Stout
That's correct, sir. And all they want to do is talk about the Trump administration antitrust. Well, and part of the problem is that this is an antitrust doctrinal problem. So the Biden DOJ was actually pursuing antitrust case law the way it is established. And I think that's part of what I've been trying to be here today to convey is that we do I think in fact need to think about out-of-market efficiencies when we're looking at these competition concerns because JetBlue providing more and extended service was a benefit to consumers that was completely discounted under current antitrust doctrine.
And I think this committee has the jurisdiction to solve that problem.
Timothy Ravich
No, I would add something like this, which is Spirit is an example of deregulatory success. They created a completely fresh innovation that actually...
Speaker 31
So fresh they named it after them, right? What's it called, the Spirit effect?
Right, their yellow planes were...
Speaker 24
Damn, that's like, oh, they were so unique, so new that they actually called it the Spirit effect in the airline industry, imagine that. And Elizabeth Warren says no, no, no, we're going to put them out of business, not let them continue. We can't let JetBlue buy, oh, we can't have a merger because five big people competing would be somehow harmful to consumers when right now it's four big players. That makes no sense to me. Keep, I didn't mean to jump in, keep going.
Speaker 33
Okay. Governor, you get the last minute or to hopefully educate the committee on why we need to do things the right way at the Justice Department versus how it was done before. Anything you want to add?
You want me to freeform?
Oh, yeah.
Chris Sununu
No, well look, I would just, you know, when we talk about the one thing I've picked up here is today 46% of all passengers fly on low cost or ultra low cost carriers. That number was about 25% in the year 2000, it was about 4% around the time of deregulation.
So more people are flying on these ultra-low-cost carriers and low-cost carriers than ever before, which is an opportunity. I would just caution, I know the 75-80% has been thrown around. You have to be careful. That can be miles traveled. That can be number of flights.
But when you look at actual number of passengers, they have about 50% of the low-cost and ultra-low-cost carriers. And that's a great thing. That increased competition with low-cost pricing has forced the big guys to create low-cost models that they traditionally didn't have to allow, again, more competition for lower-income families.
Imagine that. Competition in the marketplace. Imagine that. Mr. Chairman, I yield back.
Speaker 49
Thank you, Mr. Chairman. As my Democratic colleagues have laid out, Republican attempts to blame the Biden administration for the collapse of Spirit is nonsense. It's a distraction from the Iran war, which is illegal, unpopular, and cruel. And it was fuel prices that was a major factor in Spirit going under. It's a distraction from the cesspool of corruption at the DOJ Antitrust Division and what it's become.
And it's a distraction from the real competition issues facing commercial aviation today. Despite the rosy picture that Governor Sununu paints, only 31% of Americans have a positive view of the airline industry. And consolidation has fueled anti-competitive practices that are ripping off constituents like mine and hurting the aviation system. We're seeing these practices, for example, at Chicago O'Hare, which is the only dual-hub airport in the country. And that competition seems to bother United CEO Scott Kirby.
Mr. Kirby has said that his long-term plan is for United to take over American's gates and threatened to add, quote, "as many flights as are required," unquote, to crowd out American. After United tried to flood O'Hare with unprofitable flights, the FAA imposed a flight cap to address congestion that would have overstressed the system and jeopardized safety. This turf war and the flight cap likely influenced Southwest's decision to leave O'Hare and the decisions of low-cost carriers to reduce capacity there as well. Professor Rose, how has airline consolidation and the rise of fortress hubs led to more anti-competitive practices like what we're seeing at O'Hare?
Nancy Rose
So I want to first note that as you did, hub airlines can confer benefits for local travelers by offering frequent non-stop service to many destinations. But the economics literature shows that hub airlines can cement their market power and high fares by tactics to keep their rivals small or to force them out, as you've alluded to. Chicago has long benefited from competition between two hub airlines at O'Hare, giving them the benefits of that intense set of offerings, but constraining the anti-competitive effects. And I think the evidence shows that United seems to be working to reduce those competitive constraints. Unchecked, I think it could have enormous adverse consequences for Illinois travelers.
Speaker 49
Thank you. And I want to discuss another anti-consumer practice: surveillance pricing. Last year, Ranking Member Nadler and I demanded answers after Delta executives indicated that they were partnering with an Israeli AI pricing company to adopt surveillance-based pricing. Governor Sununu, let me ask you, do any of your members charge individualized prices to consumers based on personal information like purchase history, web browsing behavior, geolocation, social media activity, or financial status?
Chris Sununu
100% absolutely not. Surveillance pricing is different than dynamic pricing. Dynamic pricing, every virtually every industry uses. Surveillance pricing, as you pointed out, looks at personal information and we absolutely do not participate in that.
Speaker 49
Well, since these companies claim that they're not engaged in surveillance surveillance pricing, would Airlines for America support legislation banning this practice?
Speaker 49
So, if you're not going to adopt surveillance pricing, then you should have no objection to banning it. And from an antitrust enforcement to reforming gate and slot allocations, there are many other policy solutions that would increase competition, lower prices, and protect workers. Congress should be enacting them, not covering up Trump's corruption and criminality. Before I yield back, I would ask unanimous consent to submit for the record my letter with Ranking Member Nadler to Delta about surveillance pricing. I also ask unanimous consent to submit this July 2024 report titled "How to Fix Flying: A New Approach to Regulating the Airline Industry."
Thank you, and I yield back.
Speaker 53
Without objection. We now recognize the gentlewoman from Vermont for UC request.
Becca Balint
Thank you, Mr. Chair. First, from Reuters, "Spirit Airlines shuts down industry's first Iran war casualty."
Without objection.
Becca Balint
From the BBC, "Trump says, 'I love the inflation' as US prices rise at fastest rate in three years."
Without objection.
Becca Balint
From Frommer's, "US airlines try to abandon passenger rights and performance reports to secretly police themselves." Airline lobbyists are pressuring regulators to abandon your protections.
Without objection.
Becca Balint
From the Travel Tech Travel Technology Association, a prepared statement for the record.
Scott Fitzgerald
Without objection. Thank you. Now recognize the gentlewoman from Wyoming for five minutes.
Speaker 41
Thank you. I do want to remind everyone that the Spirit-JetBlue merger failed because of the Biden administration's outright hostility to mergers during those four years when they were in office. Lina Khan took the position that no merger would be allowed unless the parties ended up worse off than before, which I think is incredibly stunningly stupid. But that was the position that they took, and now we are where we are. And I think that Mr. Stout, Mr. Ravich, and Governor Sununu, you have described the economic consequences of those kinds of decisions.
One of the frustrations that I have had being in Congress is that I have not found many people in Washington, D.C. who understand the concept of opportunity costs. I would love it if we had a requirement, maybe we can pass a constitutional amendment, that before you can become a member of Congress, you actually have to take an economics class to learn something that basic. I come from Wyoming, and despite being one of America's most rural states, Wyoming's air service is a significant economic contributor. Wyoming's 39 public-use airports collectively contribute approximately 3.5 billion in annual economic impact, while nine commercial service airports support over 20,000 jobs each year. Over 875,000 passengers boarded flights departing from Wyoming's airports in 2025, with my state ranking seventh nationally in passenger growth since 2019.
Wyoming has the second-highest average fare in the country. It is 53% more than the national average. And with new industries moving into Wyoming each year and tourism being one of our largest business sectors in terms of economic impact, maintaining accessible, reliable air service is critical for economic growth and development. And in many rural markets, there is effectively only one network carrier providing meaningful connectivity.
Speaker 40
Mr. Ravich, what metrics should Congress use to determine whether competition is improving for rural consumers?
Timothy Ravich
Congresswoman, thank you for the questions. Some of the metrics you just gave are compelling for Wyoming, for example, right? You can look at those things and see that there's a magnetism to Wyoming, Cheyenne, etc. The concern - we don't want to disconnect certain communities, that was always a concern of deregulation. At the same time, government subsidization of airlines making them go to places that aren't necessarily compelling business cases, I think is a fair thing to say.
And so we just have to sort of balance those opportunities, economic opportunities for firms to reasonably decide what business model they want, while also giving Americans in emerging places and dynamic places the opportunity to travel where they want and can.
Speaker 41
Okay, and Mr. or Governor Sununu, in your written testimony, you cite that 5.5% of U.S. domestic market passengers traveling in city pairs were left with just one carrier. With limited exceptions, this statistic is broadly applicable to Wyoming as most of our communities solely rely on United Airlines for commercial air service. What responsibility do major airlines have to maintain access to the national air transport system for rural communities?
Chris Sununu
Yeah. So let me, if I may, let me begin by saying I think you're absolutely correct. Wyoming especially is disproportionately, even as you talk in rural areas, really disproportionately challenged when it comes to access, specifically in Cheyenne and Jackson, and I know the airlines have looked at different opportunities there. A couple, couple things. Rural access is absolutely critical, right?
That's about choice. That's about competition. What we find is that consumers are making interesting choices. They're not just looking at their smaller airport, they're willing to travel further because smaller airports are typically more expensive, unfortunately. So that's why EAS, the EAS Essential Air Service program is vital.
We're huge supporters of it. I frankly think it should probably be expanded to make sure that these connectivity points are really there. And to your point, this is where in some markets you do have five, six, seven, eight different competitors flying from point to point. Not in Wyoming. Not in Wyoming.
It's really, really tough. So again, anything we can do to again make sure that on a deregulatory basis, making sure that the financial opportunities flow to the customer, not to the government, or to the customer, those opportunities flow there so that competition can thrive, reducing the cost on airports, making sure that infrastructure is done, making sure that again, I go back to even looking at our national airspace, right? How right now we manage every little pocket manages its own little national air or own part of the national airspace as opposed to this new modernized system that Brian Bedford and the FAA are bringing into play, which will allow more efficiency, especially in rural areas that right now you could have, you have small airports that could have unmanned towers right now, right? That a major carrier isn't going to fly there necessarily. So by having a more comprehensive air control system as well, you're going to have a more opportunity in rural areas.
Speaker 41
I am at a time, but if you have an opportunity, I would love for each of you during the course of this hearing to give one example of what you think Congress should do to improve this situation. Thank you and I yield back.
Scott Fitzgerald
Gentlelady yields back. Now recognize the gentleman from Georgia for five minutes.
Speaker 48
Thank you, Mr. Chairman. It's been years since the Biden administration challenged the acquisition of Spirit by JetBlue. It's been years. Isn't it a fact that Spirit collapsed because Trump's unconstitutional war of choice with Iran caused fuel prices to surge uncontrollably?
That's what the Spirit CEO said.
Speaker 46
And we have all felt the pain at the pump with our cars, and the price of jet fuel went up even more steeply than the price of gasoline. Once Trump went to war with Iran, the price of jet fuel became more than double the cost that was contemplated in Spirit's restructuring projection, costing Spirit nearly $100 million more than they were expecting in March and April alone. And in fact, as you note, Professor Rose, their bankruptcy filings admit that it was untenable fuel costs that led to their downfall. And the impact of Trump's reckless war extends beyond Spirit. The Bureau of Transportation Statistics reported that airlines paid nearly $6.5 billion in fuel costs in April of 2026, which is 78% higher than what they paid a year before the war began.
Isn't that right, Mr. Sununu?
No, it's not right.
Speaker 46
Okay, well isn't it correct that airlines could not absorb the added cost of the Iran war and the price of jet fuel, and so that's why they had to raise prices over 30%?
Chris Sununu
The airlines as a whole, yes sir. Sorry, but Spirit Airlines was in major financial distress years before the issue in Iran though.
Chris Sununu
Two months of increased fuel costs did not sink Spirit. That's not what sunk Spirit.
Speaker 48
Well, it certainly wasn't the denial of the merger that did it. But let me move on. Even people who are not flying are hurting because of Trump's war of choice. Diesel prices are skyrocketing. Trucks that deliver goods to grocery stores use diesel, so they need to pass those expenses on to consumers.
And in just the first few months of this unconstitutional war, American households paid an extra $450 on average. Wholesale prices are rising, hiring plans are delayed, and farmers cannot get their fertilizer for their crops. Trump went in without a plan, and so who knows how long this war is actually going to last. American businesses and consumers were finally free from Trump's tariffs, just in time to be slapped down again by a price increase from this war of choice. Professor Rose, one of the phrases in your written testimony really struck me.
You said that you were concerned that under the Trump administration, antitrust enforcement is turning into, quote, "a political favor factory," end quote. I don't think it could be put any better than that. Can you talk a little bit more about why the entire system suffers when the wealthy and the politically connected can buy the outcome that they prefer?
Nancy Rose
Yeah, I always thought of antitrust as being the domain that preserved a consumer-facing and worker-facing interest in competition, and honestly for other small businesses or businesses that want to grow, preserved their ability to expand. When you don't have that protection, then you empower companies, particularly stronger companies or companies who are seeking competitive advantage and monopoly rents, to raise prices, to create barriers to entry to competition, to restrict others from coming into the market. As I mentioned before, you can have workers getting paid less because you're reducing competition for their employment. And all of that has tremendous cost for the American people.
Speaker 46
Thank you. Mr. Sununu, I find it curious, I'm curious about your disagreement with the chair of Spirit admitting that it was untenable fuel costs that were the cause of their demise. You take issue with that, I don't understand why. But let me ask, let me ask Professor Rose, do you think that concentrated unchecked economic power poses a threat to freedom?
Nancy Rose
Yes sir, although I'm not sure that that's accessible through the antitrust laws, at least as currently written.
Scott Fitzgerald
Gentleman yields back. Now recognize gentleman from Kansas for five minutes.
Speaker 42
Thank you, Mr. Chairman. I want to thank all of our witnesses for being here. I've listened carefully to the questioning back and forth. As always, it's been informative. And listened to our friends on the other side who have talked a great deal about fuel costs.
And I think I'd like to take up that line of discussion, Governor, perhaps with you, knowing that you most directly reflect through your folks the views of the industry. I would hope the answer to this question is no, but Governor, would it surprise you... oh, thank you very much. That's good. Best witness I've had all day. That's good.
Would it surprise you to know that jet fuel prices on average at the height of the war in Iraq were the same as they were in April of 2022?
Speaker 42
And of course in April of 2022, we were about two months after the Russian invasion of Ukraine, isn't that right?
There was a, there was a brief spike there, yes.
Speaker 43
And it was only three months after April of 2022, in July of 22, that the merger of JetBlue and Spirit was publicly proposed, isn't that right?
I believe that's right.
Speaker 43
So at the time the antitrust reviewers in the prior administration began their consideration and ultimately review of the merger, didn't they know or shouldn't they have known that fuel price spikes were not only a possibility but a recent reality?
I would imagine so, yes.
I would have hoped so, yes.
Speaker 42
Would airline managers, leadership, have taken that into account in their planning for the future survivability of their firms?
Chris Sununu
Yes, and I would just say each of the airlines kind of hedges against fuel in very different ways. And some of them don't hedge at all. I mean, they used to hedge, they don't quite anymore in terms of how they manage their risk. But they all manage that risk profile differently.
Speaker 42
So let me, let me talk a little bit about fuel prices, Governor, and it's because it's been so central to today's discussion. I think it's very relevant. You know, going forward, there are going to be future fuel price spikes through international events, through other market factors. It is going to happen, as it happened in April of 22 and it happened again within the last six months or so. Something will happen down the road.
And so as airline leadership, managers, whether they're from the big four, from the mid-sized, or from the small planes, they all pay the same fuel prices, don't they, Governor?
Relatively, yes.
Speaker 50
And so they all have to consider planning to sort of hedge against this risk of a spike in prices, isn't that right?
Speaker 42
So as they're planning, do they take into account ways that they might be able to mitigate the price of jet fuel going forward?
Speaker 42
Would that include a discussion of alternate forms of jet fuel that might be coming onto the market in ways that are commercially relevant?
Chris Sununu
Of course, you know, they are all big believers and users in SAF, as you know, and that continues to rise.
Speaker 42
So let's talk about SAF just a little bit. It's obviously an interest of ours in farm country. We care a lot about it. But we care about it not only because it helps our producers and it helps our local economies when it's produced domestically and the investment comes here, but also because it helps our consumers who are ultimately flying on the aircraft that have the potential.
Can you share with us a little bit about how a mature domestic SAF industry at scale could have an effect on the planning for airlines to be more competitive, including price competitive for consumers?
Chris Sununu
Sure. So as I think as the industry matures, the economics get better and better, right? Because like any fairly new technology, and it is a fairly new introduction into the industry, it starts out fairly costly. Lots of new, I won't say barriers to entry, but you know, costs, R&D. All of our airlines are investing in various forms of research and development to make SAF more accessible, easier to produce, whatever it may be.
Trying to get more companies that actually make, giving more time for more companies that actually make SAF to come onto the market. I actually just met with one of the largest SAF manufacturers and they're building a brand new plant, they're expanding. So there's no doubt that over time, prices should definitely come down, be much more competitive with standard jet fuels and provide more options potentially as you may see severe spikes in the future.
Speaker 42
Are there ways that Congress could better partner with the industry to help that transition to scale occur?
Chris Sununu
Look, any sort of infrastructure investment. I would say for airlines in particular, some of the investments we look at are the transportation, right? You have kind of your own transportation system for SAF because you don't, you know, you're not mixing it with other traditional jet fuels. Permitting. Permitting reforms to make sure that we can build and develop, whether it's folks that want to develop SAF or the pipelines to move SAF from point A to point B or getting tanks, storage tanks approved at various airports.
That's one of the bigger barriers because you need kind of a whole separate system for it, so that requires a lot more infrastructure. So permitting and investment in that infrastructure would be very helpful.
Speaker 57
And these are discussions that will involve everybody in the industry except Spirit, right? It's not relevant to them anymore.
Not anymore, unfortunately, yeah.
Chairman, I yield back.
Scott Fitzgerald
Gentleman yields back. I think we've gone through just about all the members that are available today. I was just going to utilize my five minutes to ask two more questions. Governor Sununu, and this is a topic that came up a couple times, just dig into this a little bit more. At the slot-controlled airports, kind of the incumbent carriers benefit by it's kind of a use-it-or-lose-it system, right?
That's right.
Scott Fitzgerald
Do you think the slot system harms competition because of the way it's kind of designed?
Chris Sununu
No. Well, a couple things. So when a smaller carrier wants a slot, that's kind of worked out between the carrier and the airport itself. And if the carrier isn't happy or feels like they're being unfairly treated, there is an appeals process up to the FAA that they can use. But that's really a carrier-airport type decision.
I would argue and let you know that more slots are allocated to low-cost carriers today than ever before, right? So they have and are continued to grow capacity. So yeah, I mean, the slots, not and by the way, not every airport is slotted. That's another thing to be aware of. Some airports are, some airports aren't.
You know, one of the things I've learned in this industry is there's a saying, if you've seen one airport, you've seen one airport. And that's in terms of its structure, their management, their slot system, how they allocate and the infrastructure and the airlines coming into it. So everyone is truly taken unique. But we want, we want again, we want that broad variety. I represent a lot of airlines, right?
I want everybody to have a fair shot at that pie.
Scott Fitzgerald
Very good. Thank you. Mr. Ravich, what's your take on the slot system and the impact it has on overall operations nationwide?
Timothy Ravich
Chairman, I do think you've identified an issue that's worth the attention of this committee. As Governor Sununu rightly points out, A4A even has a diverse constituency, right? There's no sort of monolithic airline industry. So they even compete with one another and they don't agree necessarily. Some of these airlines want the other airlines' slots, even with, you know, United and American, the big airlines.
So I think there is some anti-competitive pressure or tendencies in slots and gates that does need evaluation. And I should refer to, I think, pending legislation, right, in the Senate with the Gateway Access Law, which does have some merit to it.
Scott Fitzgerald
Well, very good. That concludes today's hearing. We want to thank the witnesses for appearing before the subcommittee today.
Without objection, all members will have five legislative days to submit additional written questions for the witnesses or additional materials for the record.
Jamie Raskin
I just want to add a couple of UC requests if that's alright, Mr. Chairman. Firstly, the decision of the Reagan-appointed Judge Young in US versus JetBlue Airways Corporation, January 16th, 2024.
Jamie Raskin
The second one is an article from Law360 titled "Biden-era M&A Data Shows Continuity, Not Revolution."
Jamie Raskin
And then finally, this was an article February 21, 2025, "Spirit Airlines to Exit Chapter 11 Within Weeks as Court Backs Recovery Plan." That of course was just a few days before the war started in Iran.