The Friendly Skies Monopoly: Unpacking the Antitrust Nightmare of a United-American Merger

When the rumor first surfaced, it wasn’t accompanied by the customary press release fanfare. Instead, Scott Kirby discreetly floated the idea of a United-American merger to senior officials in Washington, including the President. The way these items usually land when someone wants to check the temperature of a room before entering it was revealed by Bloomberg, almost casually. Kirby seemed to know exactly what he was doing. Before proposing a $114 billion airline partnership to an incumbent president, one must consider whether the Justice Department would allow it to proceed.

Just the numbers are astounding. Together, United-American would operate 2,874 aircraft and generate almost twice as much revenue as Delta. It’s not a merger. That calls for a reevaluation of American aviation. However, it’s difficult not to question whether regular travelers would initially notice the difference after strolling through a crowded terminal at O’Hare last month and witnessing passengers shuffle past Cinnabon counters and stand in long lines toward overworked gate agents. Already, the chaos seems ingrained.

The empirical record on airline mergers isn’t quite as concerning as Congress likes to suggest, which is interesting—and often overlooked. After examining every significant airline merger since deregulation in 1978, economists Steven Morrison and Clifford Winston discovered that carriers typically don’t merge for anticompetitive purposes. They combine to take over international routes, which are still incredibly lucrative because of government agreements that restrict entry, or to save a faltering competitor from going bankrupt. Despite Justice’s opposition at the time, the USAir-Piedmont and Northwest-Republic agreements ultimately had relatively minor effects on fares. Balances for frequent flyers even increased.

This one feels different, though. Too much of the math is biased. At the same time, hubs in Chicago, Charlotte, Dallas, Houston, Newark, and Miami would be dominated by a single carrier that controlled about one-third of the domestic market. Redundancy vanishes when weather snarls an interconnected system, and travelers are already familiar with this. Anyone who experienced the Southwest holiday crisis in 2022 is aware of how easily scale can turn into a liability.

The situation is complicated by the low-cost carriers. Now competing on almost three-quarters of legacy routes, Southwest, JetBlue, Frontier, and their cousins have demonstrated a willingness to enter markets like Philadelphia and Pittsburgh whenever fares start to rise. The pressure to compete is genuine. However, budget carriers don’t do well in the premium travel market, which is the cabin where the real profits reside. Additionally, Moody’s Analytics reports that the top 20% of US households now account for almost 60% of consumer spending. The entire game revolves around the high-value flyer.

Then there is the loyalty data, which may be the least noticeable but most important of all. Together, MileagePlus and AAdvantage would be the nation’s biggest first-party travel data platform. Suddenly, co-brand contracts that support significant portions of Chase, Citi, and Barclays’ card portfolios would need to be renegotiated. It’s the kind of disruption that will subtly change how millions of Americans earn and burn points for years, but it won’t make cable news.

It’s still genuinely unclear if the deal will pass a thorough antitrust investigation. Although the Trump administration has indicated a business-friendly stance, airlines occupy an odd political space because populist outrage over fees and delays transcends political boundaries. It’s difficult to avoid the impression that the industry has been heading in this direction for a while as you watch this develop. Somewhere along the way, the friendly skies lost their friendliness. This kind of merger won’t address that. We may have fewer people to blame as a result.