Secretary Buttigieg Must Take Immediate Action to Address Airline Crisis and Embrace President Biden’s Pro-Competition Agenda
Washington, D.C. — After a summer travel season of record flight delays and cancellations, withheld refunds, and skyrocketing airfares, the American Economic Liberties Project today sent a letter to Transportation Secretary Pete Buttigieg, urging him to exercise his full authority to deliver much-needed relief to air travelers and bring the USDOT in line with the rest of President Biden’s robust competition policy agenda.
“The Department of Transportation, as the sole regulator of the severely concentrated airline industry, is out of step with President Biden’s whole-of-government competition policy agenda,” said William J. McGee, Senior Fellow for Aviation and Travel at the American Economic Liberties Project. “Secretary Buttigieg has the authority to protect travelers who no longer have the power to vote with their wallets by fining airlines for chronic flight cancellations, deceptive schedules, and illegally denying cash refunds. Before this summer’s historic air travel chaos recurs over the holiday season, Secretary Buttigieg should also make clear he intends to preserve the little competition that remains by denying further anticompetitive mergers and conduct a thorough review on how consolidation has harmed consumers, labor, cities, and entire regions of the country.”
More flights were cancelled in the first half of 2022 than in the entirety of 2021, a 42% increase over 2021. Yet average domestic airfares are up 45% since 2019 and consumers are still waiting on $10 billion in unpaid refunds dating back more than two years. Airline passengers have no real choices, no bargaining power, and no recompense in the face of historic delays, mass cancellations, unpaid refunds, and untenable airfares in much of the country.
As a result of the federal preemption clause in the Airline Deregulation Act of 1978, the U.S. Department of Transportation is solely responsible for holding airlines accountable. Last July, President Biden issued an executive order on promoting competition in the economy, which stipulated lengthy, multi-point directives for the Secretary of Transportation “to better protect consumers and improve competition” in the airline industry. A year later, the DOT has not only failed to address these directives, but the the agency’s lax regulatory approach has also allowed and encouraged airlines to continue destabilizing the air travel industry. Despite more than two years of investigations, the DOT has refused to bring even a single dollar of fines against any U.S. airlines for their offenses and has not swiftly enforced consumer refunds or made airlines adjust their schedules.
Not responding to the airline crisis is not a choice. The DOT must establish structural solutions to the airline industry’s excessive market power; use its authority to deny further anticompetitive mergers, including JetBlue and Spirit, until a thorough investigation is conducted of the ongoing harms caused by a wave of mergers in recent years; and preserve what little competition remains in this highly concentrated sector.
Read Economic Liberties’ letter to U.S. Transportation Secretary Pete Buttigieg here.
The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.