The FAA Reauthorization Act of 2024 included a provision requiring the Government Accountability Office to review competition and consolidation in the U.S. airline industry [1][4]. GAO delivered that review by summarizing 40 empirical studies, identifying 13 with sufficiently rigorous methodologies, and reporting a finding: airline mergers increased fares between 1 and 8 percent [1]. But estimated domestic fares that incorporated available ancillary fees were lower in 2024 compared to 2007 [1].
The contradiction sits in the text itself. Congress ordered an assessment. GAO provided a literature review with a narrow confidence interval, not new investigation.
What the Studies Found
GAO reviewed 40 empirical studies assessing the effects of U.S. airline mergers [1]. Of those, 13 were deemed particularly robust, with quantitative effects that are statistically significant [1]. Three studies with especially strong methodologies found that fares increased between 1 and 8 percent following airline mergers [1].
The agency interviewed or obtained written responses from all 12 major U.S. airlines and 19 other knowledgeable stakeholders [1]. The method was synthesis, not original data collection. The provision bought Congress a summary of what researchers had already published, filtered through GAO's assessment of methodological rigor.
What the Fare Data Shows
Domestic airlines carried nearly 850 million passengers throughout the U.S. in 2025, according to Department of Transportation data [1]. Those passengers paid less in 2024 than in 2007 when ancillary fees are folded into the calculation [1].
Market share and other key market structure indicators show increased presence of ultra-low-cost airlines in 2022 compared to 2007 [1]. Those indicators remained largely unchanged from 2022 through 2024 [1]. The ultra-low-cost carriers expanded for 15 years, then flattened.
How do mergers raise fares 1 to 8 percent while total fares drop? The mechanism: airlines consolidated, raised base fares, then introduced new fee structures that made the total appear cheaper while extracting more per passenger. The baseline shifted. The studies GAO reviewed measured merger effects on base fares. They did not measure the revenue model transformation that occurred simultaneously.
What the Studies Didn't Measure
Stakeholders identified five key factors affecting airline competition, including airport access and the introduction of basic economy fares by network airlines [1]. Those factors shape the competitive landscape but fall outside the scope of the merger studies GAO summarized.
Stakeholders also pointed to the increasing importance of airline credit card revenue as a relatively recent development affecting competition [1]. GAO included the observation in the report but provided no quantification. The empirical literature hasn't caught up to the financial products now driving airline revenue.
Network airlines introduced basic economy fares to compete with ultra-low-cost carriers. Those fares unbundled services that were previously included in the ticket price. The result: a fare structure that looks cheaper on comparison sites but extracts similar or higher total revenue through fees for seat selection, carry-on bags, and priority boarding. The studies GAO reviewed predate this pricing model or don't isolate its effects.
Airport access shapes competition but operates through mechanisms the merger studies don't capture. Slot-controlled airports limit entry. Gate availability constrains expansion. Long-term lease agreements lock incumbents into dominant positions. A merger that raises fares 3 percent in one market may have no effect in another because the airport infrastructure prevents new entry regardless of consolidation.
The provision required GAO to review competition. It did not require GAO to reconcile the 1-8 percent merger-driven fare increase with the overall fare decrease when fees are included, or to measure revenue sources the empirical literature hasn't quantified yet [1][4]. Congress has a number and a contradiction. The 850 million passengers who flew domestic in 2025 are already paying under the structure GAO described but didn't fully explain [1].
The Path Forward
The GAO report provides a foundation for understanding merger effects, but the questions it raises about modern airline economics require additional research. Future studies will need to account for ancillary revenue streams, basic economy segmentation, and infrastructure constraints that now define competitive dynamics. Until then, policymakers are working with an incomplete picture of how consolidation affects the passengers whose travel funds an increasingly complex revenue model.
