Mergers beget mergers.

That’s been the vicious cycle of many industries over the past several decades, a phenomenon known as "concentration creep." If a company grows, its rivals want to grow to compete for market share.

In certain sectors, countervailing powers make that trend even more pronounced. If a company on one side of a transaction grows, the company on the other side wants to grow to regain leverage. (Think health insurers and hospitals.)

This dynamic is most visible in the airline industry at the moment. In a short period under the Bush and Obama administrations, United Airlines bought Continental, American merged with US Airways, Delta gobbled up Northwest, and Southwest took over American Trans Air. The budding power of those four giants has triggered a fight-or-flight instinct among the lower-tier competitors, which are petrified of getting locked out of the oligopolistic club at the top.

Last week saw the continuation of this second wave of concentration creep, which has played out so often now that airline insiders refer to it as "Groundhog Day."

Last week, Alaska Airlines, the fifth-largest U.S. carrier, announced a proposed deal to purchase Hawaiian Airlines.

Analysts suspect the deal came together in response to JetBlue’s proposed acquisition of Spirit Airlines, which would lead to the sixth-largest airline absorbing the seventh-largest. And JetBlue mainly sought that purchase to protect itself after reports emerged that Frontier was in talks to buy Spirit.

The difference this time around is that federal regulators who’d previously rubber-stamped these deals are now on the prowl to enforce antitrust laws. This spring, the Justice Department filed to block the JetBlue merger and concluded its court case before a federal judge last week, a day before the Alaska announcement.

The Department of Transportation joined the lawsuit, in a surprising move that indicated a newfound resolve by Secretary Pete Buttigieg to embrace his department’s authority to challenge mergers.

These actions don’t yet seem to have deterred Alaska from pursuing its deal, or at least offset the market risks of getting left behind from the pack.

THESE FEVERISH MERGERS ARE A REFLECTION of the failed deregulation project of the 1970s, when the Jimmy Carter administration passed legislation to dismantle the Civil Aeronautics Board.

"Those policies plus the lack of merger enforcement took us away from the Goldilocks of regulated competition we had in place, similar to public utilities, and we’re living with the disastrous consequences today," said Ganesh Sitaraman, a law professor at Vanderbilt University and the author of the newly released book Why Flying Is Miserable: And How to Fix It. (Sitaraman is also a Prospect board member.)

As he explains, the architects of deregulation actually intended to deliver more competition but ended up creating just the opposite, in large part because of the lack of merger enforcement. The U.S. airline industry is the most consolidated it’s ever been in its 100-year history, with the Big Four of American, Delta, Southwest, and United combining for 80 percent of all domestic routes.

Even national market share statistics can fail to illustrate just how concentrated the regional market really is. In 40 of the largest 100 airports, just one airline commands a majority of air travel, according to data from 2015.

Without competition, major airlines have been able to increase airfares on captive travelers and worsen the consumer experience. Late arrivals, cancellations, and delays have become a common feature of the traveling experience especially since the end of the pandemic.

Perhaps most egregiously, the deregulation era also led to the hollowing out of critical transportation infrastructure for large sections of the country. Airlines prefer to fly the highest-demand routes from major cities, where they can make the most money without empty seats. Carriers have cut routes to many towns in the middle of the country, depriving them of business opportunities, a practice the Civil Aeronautics Board previously blocked carriers from engaging in. Cutting flights is another way to justify raising prices. It’s gotten so bad that numerous heartland cities now provide taxpayer funds to airlines just to keep them flying consistently from their airports.

Labor has suffered as well. Airlines routinely understaff their planes, which overburdens employees, leads to high turnover, and drives many of the cancellations and flight delays.

The JetBlue deal threatens to reinforce these trends that make flying increasingly miserable for consumers. As William McGee, airline expert at the American Economic Liberties Project, puts it, the deal represents an identity crisis for the airline. Since its founding in the early 2000s, JetBlue has been a disrupter in the industry, with lower fares and a focus on quality; even today, the airline talks up offering free Wi-Fi and the best legroom in the air. But those days have long passed, and now it’s saddling up next to the giants.

JetBlue is defending the deal in court by arguing that other mergers were allowed through, so why not theirs. "It’s the kind of argument I would use with my parents as a kid because I’m the youngest, but that’s not exactly a strong legal case," said McGee.

As the largest carrier at JFK and in Boston, JetBlue also claims that the deal will enhance competition against the Big Four. The DOJ counters that the deal would deliver windfalls to the giants by neutralizing Spirit, one of the few remaining ultra-low-cost carriers. While Spirit runs an exceptionally no-frills service and makes up for its low fares with ancillary fees for just about everything, for most of its routes Spirit acts like a price discipliner, forcing major airlines to drop their fares in order to compete.

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