ICLE’s Stout: Government Bottlenecks Are Holding Back Airline Competition
WASHINGTON (June 24, 2026) — The biggest barriers to airline competition are often built by government policy itself—not by a shortage of antitrust enforcement—International Center for Law & Economics (ICLE) Director of Innovation Policy Kristian Stout testified today in a hearing of the House Judiciary Subcommittee on the Administrative State, Regulatory Reform, and Antitrust.
Stout’s testimony argued that the current regulatory framework both constrains competition and makes it harder for budget carriers to survive. In a high-fixed-cost, low-margin industry, he warns, government-created scarcity can entrench incumbent airlines while weakening the smaller carriers that put the most pressure on fares.
“Recognizing concentration, however, is not the same as identifying competitive harm or crafting remedies tailored to that harm,” Stout testified. “The most significant constraints on airline competition are overwhelmingly governmental in origin.”
Stout points to the collapse of Spirit Airlines as a cautionary example of static merger analysis. After the government blocked the JetBlue-Spirit merger, the 34-year-old carrier ultimately ceased operations—eliminating the low-fare competitor the enforcement action sought to preserve.
“The government won the case, but consumers lost the carrier,” Stout said.
His testimony identifies several government-created barriers that limit competition before it can emerge. Federally rationed airport slots at congested airports advantage carriers that already hold them and can encourage uneconomic “ghost flights” flown largely to preserve those holdings. Cabotage and foreign-ownership restrictions limit both who may compete on domestic routes and who may supply capital to distressed carriers. Lengthy environmental reviews delay runway and airspace expansion that could relieve congestion. And an expanding body of consumer-protection mandates erodes the operational flexibility on which thin-margin, low-cost carriers depend.
“Much of the competition that never materializes in this industry is foreclosed upstream: by airport capacity the government rations, by capital it restricts, by infrastructure expansion it delays, and by operational mandates that fall most heavily on the carriers least able to absorb them,” Stout testified.
Rather than addressing concentration primarily through more aggressive merger enforcement, Stout urged Congress to modernize merger analysis for network industries, reform airport-slot allocation, study liberalization of foreign-investment and cabotage rules, codify environmental-review reforms, and subject new consumer-protection mandates to rigorous cost-benefit review.
“The most procompetitive course available to Congress is not to preserve competitors on paper, but to make competition easier in practice,” Stout said. “Spirit’s empty gates offer a cautionary reminder that protecting a competitor is not the same as protecting competition.”
To arrange an interview with Stout contact Jim Fellinger at [email protected].
About ICLE
The International Center for Law & Economics is a nonprofit, nonpartisan research center working with a roster of more than one hundred academic affiliates and research centers from around the globe. ICLE scholars promote the use of law and economics methodologies to inform public policy debates.