How Competition is Keeping Travelers in the Pilot’s Seat

The U.S. Department of Transportation recently greenlit a partnership between United Airlines and JetBlue Airways that aims to enhance convenience and flexibility for U.S. air travelers. In reaction, some lawmakers raised concerns that the arrangement could potentially harm competition. 

According to Senator Richard Blumenthal (D-CT), the partnership—dubbed “Blue Sky”—would “lead to fewer and more expensive options for travelers.” But the criticism misses the mark by a mile. Innovations like this within the airline industry are the byproducts of a healthy, thriving sector.

Today, more than a dozen carriers generate annual revenues exceeding $1 billion, creating a dynamic marketplace where consumers can shop around for the best option. The battle for market share at major airports is intense, with airlines vying for gates, routes, and customer loyalty through innovations in pricing, amenities, and network expansion. 

For that reason, airlines are constantly evolving to stay ahead of the competition and win over consumers. But this wasn’t always the case.

Prior to the Airline Deregulation Act of 1978, the Civil Aeronautics Board (CAB)—a U.S. government agency at the time—rigidly controlled fares, routes, and market entry. As a result, flying was a luxury reserved for the ultra-wealthy. In fact, less than one quarter of Americans had boarded a plane by 1965. 

Regulatory hurdles were imposed left-and-right. For example, Continental Airlines endured an eight-year approval process to launch a simple route from San Diego to Denver. This system fostered inefficiency, with high fares and limited options stifling growth.

A bipartisan push for deregulation sought to inject competition into the industry, resulting in lower costs and greater accessibility. These forecasts have largely materialized over the ensuing decades. Inflation-adjusted average domestic airfares have plummeted by as much as $1,000 since the 1970s. 

Passenger volumes have also surged dramatically. Data from the Bureau of Transportation Statistics indicates that approximately 850 million travelers (domestic and international) took to the skies in 2024. That’s an increase of nearly 650 million passengers compared to 1974, when figures hovered around 200 million. 

The successful democratization of air travel was made possible by one key factor: deregulation that fuels competition. This healthy environment fuels new partnerships and innovative strategies that aim to offer more value to flyers. When airlines are free to compete, passengers are the ones in the pilot’s seat.