Airlines and Overzealous Antitrust Enforcers

It’s a mistake to blame deregulation for Spirit Airlines’ demise

Letter to The WSJ. 

"Regarding your editorial “Spirit Airlines and the Antitrust Left” (May 4): Many people think that because carriers like Spirit Airlines have lower costs, they should be able to compete with the major airlines by offering lower fares. That’s a fallacy.

On any route involving a hub city of a major airline, the major airline’s network will support more flights (and therefore more possible connection options) than the low-cost carrier, which relies on point-to-point traffic. This product advantage, among others, generally allows the major airlines to charge and receive higher ticket prices than the low-cost carriers.

The revenue from these premium tickets will normally cover the cost of a network carrier’s flight before all the seats are sold. This means the remaining seats can be sold profitably at any price necessary to fill them. Unless travel demand is so high, or industry capacity so low, that major airlines can fill their planes at premium prices, it will generally make economic sense for them to match any price that a low-cost carrier offers if doing so is necessary to fill a seat.

The antitrust left is now blaming deregulation for Spirit’s demise. But there are far more airline flights, with more destinations served, at lower prices in real terms, than before deregulation. This is because deregulation allowed airlines to develop networks, that efficiently aggregate and distribute traffic through mergers, international alliances and organic growth.

During the era of deregulation, I was on the staff of the Civil Aeronautics Board, which regulated airline routes and prices until 1978. The architects of deregulation, Michael Levine and Alfred Kahn, didn’t know what form airline competition would take. They were confident, however, that business executives, freed from regulatory constraints, would find the most effective ways to increase output and reduce price. That is what has happened, despite resistance from regulators and occasional missteps by misguided judges. Unfortunately, the Biden administration’s antitrust enforcers and Judge William Young prevented Spirit Airlines and JetBlue from helping airline competition continue to evolve.

Ben Hirst

Wayzata, Minn.

Mr. Hirst is former executive vice president of Delta Air Lines."