By Emmanuel Mounier, Secretary General, Global Travel Tech.
The effects of airline consolidation are not just theoretical—they have real-world consequences for travellers. Let’s look at connections between two of the world’s busiest airports: Chicago O’Hare and Frankfurt. Passengers might believe they have a choice between United Airlines and Lufthansa Group for this connection, in fact, they do not. The two airlines operate in a so-called “metal-neutral” joint-venture, meaning when flying across the Atlantic they completely coordinate their prices and schedules and even share their revenue. Passengers are presented with two brands to choose from, when the choice has actually already been made for them.
This lack of competition removes incentives for carriers to improve service quality and keep prices competitive.
Over the last two decades, the airline industry has undergone significant consolidation across all major markets, leading to reduced competition on thousands of routes. While mergers and alliances have improved efficiency for airlines, they have also raised concerns about higher prices and limited consumer choice. Regulators worldwide are now examining these trends to ensure that industry consolidation does not come at the expense of the consumers.
How We Got Here
Decades ago, the airline industry was driven by an array of national carriers, each striving to innovate and offer unique value to customers from their market but with limited commercial leeway given by states. The era of market opening and rapid technological advances brought a change and opened the skies, giving rise to numerous competitors and fostering a vibrant marketplace. Over time, however, mergers and strategic alliances began to reshape the industry landscape, leading to behemoth global airline groups. These moves, often celebrated for enhancing efficiency and enabling global service networks, have also subtly shifted the balance of power.
Recent industry analyses highlight both the changes brought through technological innovation and the complexity of today’s market dynamics.. While airlines have leveraged partnerships and digital platforms, such as automated booking and loyalty program integrations, to improve efficiency, the ongoing consolidation of carriers has resulted in many instances in fewer choices for consumers. These shifts have prompted discussions among regulators and consumer advocates about maintaining a competitive landscape that ensures competitive pricing and service quality.
Concrete Consumer Harm: The Impact of Airline Mergers
Reports, such as the one published by the Information Technology and Innovation Foundation on airline competition (https://itif.org/publications/2025/01/07/comments-to-justice-and-transportation-regarding-airline-competition), highlight how reduced competition leads to worsened customer experiences, including higher baggage fees, limited flight options, and more frequent delays. Data from the Australian airline market further emphasizes this issue—routes serviced by three competing carriers saw fares nearly halve compared to those with only one dominant airline. The case of U.S. airline mergers also underscores the broader impact: as consolidation increases, fares tend to rise while service deteriorates, leaving consumers with fewer alternatives and higher costs. In Europe, the regulator scrutiny, concerned by negative impact on consumers, led International Airlines Group (IAG) to abandon its planned takeover of Air Europa. The decision the potential impact of consolidation on consumer choice and pricing.
Connectivity and Local Impact
An important aspect that deserves attention is how reduced airline competition can affect regional connectivity. Increasing consolidation correlates with a focus of large airlines on their key hubs; large airports where they dominate in market share allowing to efficiently route passengers through their own network. The downside to this trend is that fewer airlines service smaller airports, especially those in remote communities, meaning residents near these local hubs could face even fewer options. With diminished service frequency and a narrowed range of routes, travellers in these areas may encounter higher travel costs and less convenience. This not only impacts personal travel but can also have broader economic repercussions, limiting business opportunities and regional growth due to decreased accessibility.
A Call for Balanced Skies
Looking ahead, the challenge is to balance the efficiencies of a consolidated industry with the need for robust competition. A dynamic market not only drives innovation but also safeguards fair pricing and quality service for passengers. As competition authorities continue to monitor and address imbalances, the goal remains clear: to nurture an environment where operational gains and consumer benefits coexist. In our journey through the evolving skies, the ultimate flight path should prioritize consumer well-being and connectivity, ensuring that every traveller enjoys the freedom to choose without compromise.