May 13, 2026
On May 13, The Capitol Forum sat down with Gene Burrus, founder of Burrus Competition Strategies, to discuss competition policy, pricing strategy, and regulatory issues in the airline industry. The full transcript, which has been modified slightly for accuracy, can be found below.
TEDDY DOWNEY: Hello, everyone. Welcome. I’m Teddy Downey, Executive Editor here at The Capitol Forum. Today, I’m very pleased to be joined by Gene Burrus, founder of Burrus Competition Strategies. Gene previously has held roles at Spotify, Microsoft, and American Airlines, where he focuses on competition policy, pricing strategy, and regulatory issues across transportation and technology markets. Gene, thank you so much for doing this today.
GENE BURRUS: Happy to do it. Great to be returning back to the airline industry for a bit today.
TEDDY DOWNEY: Before we get going, for our listeners, if you have a question, please put them in the chat function or put it in the Q&A panel. Get us your questions. We’ll get to them later on in the conversation.
So much going on right now in the airline industry, Gene. I would love to talk about just the difference between competition from when you were in the industry versus now, just how that competitive landscape has changed. I know there’s a lot of language around deregulation this and regulation that, but just tell us how that landscape has changed, how much more concentrated it is, how you perceive the industry then versus now.
GENE BURRUS: I think the single biggest change, obviously, is the consolidation that we’ve seen in the last 20 years. When I was at American Airlines from 1997 to 2002, there were a lot more major carriers back then, right? And we’re down now to four, essentially, right? Four and a half, maybe. But the level of consolidation has been, I think, the most dramatic change that we’ve seen. And I think it’s, therefore, changed the competitive dynamics.
One prime example that I like to point to, back when I was in the industry in the late 90s, early 2000s, profitability or not, depended on what your average load factor might be. And if you were at 68 percent load factor, you were going to lose money. If you were at 70, you were going to break even. If you were at 72, you were going to be highly profitable, right?
But if you’ve flown at all in the last ten years, 70 percent load factors are a thing of the past, right? They have been able to coordinate or watch each other’s capacity constraints or whatever the case may be. But capacity is now limited, where you’re in the 90s now for load factors. There’s never an empty seat going, right? And so, there’s been a big difference, and I think the consolidation has contributed to that, for sure.
TEDDY DOWNEY: And we were talking a little bit about this before the call and you mentioned coordination. We have a product here called Coordination Out Loud at The Capitol Forum, where we track executive commentary. I wanted to ask you if any of the executive commentary that you’ve heard recently is at all surprising in such a consolidated industry?
GENE BURRUS: Yeah, I’d say that a recent comment by the United CEO in public, where he was saying we intend to or we’re going to have to raise our fares this summer, that is the kind of statement — a couple of things were going on.
One, if the CEO of American Airlines, back in the late 1990s, made any kind of public statement with regard to their intent to raise fares in the future, literally within five minutes, I would have gotten a call from DOJ with threats of jail time for the CEO. And that doesn’t seem to have been the reaction to the United CEO’s statement like that.
And two, it was formerly governed back then by the ATPCO consent decree, where the carriers were accused of coordinating fares in advance using the ATPCO system. And so, any public statement regarding intent on fares was strictly prohibited by that too. So, it was a very different and much more I would say DOJ was paying a lot more attention to them than they are today for whatever reason. It was kind of surprising to me.
TEDDY DOWNEY: Why do you think that is? Obviously, we have a whole product designed around this. Occasionally, we will see some private plaintiff cases pop up later on if there are price increases, if there is super profitable periods, for these companies after they sort of invite each other to collude. But not as much attention, jaw boning, investigation, as you might think from DOJ and FTC. But more generally, I would say across administrations, certainly we’re seeing a dramatic drop-off.
Now, I think we can all agree that there are huge personnel issues, 30 percent attrition in both agencies, if not more. Leadership thinks mergers are mostly okay. But beyond that, across administrations, you’re seeing a lot less aggressive crackdown on invitations to collude and otherwise, questionable coordination of conduct. Why do you think that is?
GENE BURRUS: It’s a very good question. I’m not sure exactly because it really should be the nuts and bolts for DOJ. I mean, whatever people think about mergers or Section 2 conduct, there’s not a lot of disagreement that price coordination is a bad thing and not to be allowed.
But you’re right. I think on this kind of public negotiation, so to speak, there just seems to be a lot less. I mean, on the private side, it’s tough to bring the case just because you have to still prove an agreement and you kind of lack the evidence to prove the agreement. You see the results, but it’s kind of the tacit winks that happen after the public negotiation.
But that’s why it should be the realm of DOJ and FTC to step in immediately and remind them of what I assume still is the antitrust training within the companies that you’re not supposed to talk about those things in public. But maybe it’s just that there it’s deep in the rearview things like the ATPCO case and the consent decrees that were in place there are kind of deep in the rearview mirror. And you’ve got you’ve got newer executives and staffs that haven’t had their hands slapped by the regulators. So, they either don’t know the rules or are figuring they can get away with it. So, I don’t know why the agencies have kind of dropped the ball on this though.
TEDDY DOWNEY: We’ve seen state AGs pick up the slack for federal lack of enforcement when it comes to competition law. Do you see these problems in the airline industry becoming acute enough for states and municipalities to take a closer look and step up and say, hey, we have a problem here?
I know that’s asking a lot. They are already resource constrained with the Live Nation lawsuit, with mergers they’re blocking, with much, much lower staffing levels than you have at DOJ and FTC. But at some point, and these prices are high enough, it’s really going to affect commerce.
Generally, it has a huge effect on cities when a hub is dominated or airlines pull out. I mean, there’s an expectation with Spirit leaving Florida that your flights to Florida will dramatically increase in costs. At the same time, you have this shortage in airline fuel, as you mentioned, causing executives to say they’re going to increase their prices by 30 percent or what have you. Do you think state AGs can play a role here? Or are we just going to have to wait until DOJ and FTC wake up?
GENE BURRUS: I’m guessing for both resource constraint reasons and airline markets are kind of actually nationwide and worldwide to some degree, right? Capacity can’t just move from routetoroute within a country. It can literally move to somewhere else in the world if they needed to. So, to some degree, they’re worldwide markets.
On the other hand, everything is local. And really, where a hub is dominated by a particular carrier, that has huge impact on prices for those local customers most of all, right? And so, there’s a reason for the state AGs to probably have a keener interest sometimes in what’s going on in a local hub market than even DOJ might. But that’s balanced against the fact that the Georgia AG is not going to go after Delta Airlines because Delta Airlines is like a major employer in Atlanta and a huge piece of the state economy. So, the politics are difficult for a state AG when they’re faced with even a complete monopoly over a hub market, right?
TEDDY DOWNEY: Yeah, yeah. That’s a great point. And there’s also a disconnect. Maybe the if that state AG were so inclined, they could open up a market for a lot of people if they wanted to get into whatever the conduct was at the specific airport that is dominated by the airline.
GENE BURRUS: Right.
TEDDY DOWNEY: So, a bit of a tricky problem if the federal enforcers don’t get involved. I want to talk a little bit more about pricing and algorithmic pricing. We write a lot here about algorithmic price fixing. We’ve written about some of the different ways in which airlines maybe engage with that kind of algorithm, with different algorithmic pricing tools, and how that could be a potential violation of law. And again, you have this historical perspective. What was it like around that issue when you were there versus now? How has the law evolved? And how do you think policymaker policymakers and law enforcers and regulators should think about algorithmic pricing in the airline industry?
GENE BURRUS: So, I would say the thing that’s changed the most, I think, is the technology that truly can today allow very personalized pricing for anybody. Because they kind of know all about you. Or if they don’t, the search engines do. And they can identify almost to the penny your willingness to pay for a particular route on a particular day.
I would say it was a dream back then they might be able to do something, but a dream they almost were afraid to speak out loud just because they were worried (1) about the reaction of Congress or the DOT and what they would do back then. And then (2) I think because there was a lot less consolidation, there was a lot more threat of like, well, if we tried it and people found out, we would immediately get slammed by the competition. And so, there’s no way we could pull it off.
I think that’s changed today, that there’s only the four major carriers. And they probably think there’s a lot more likelihood that others might go along. I mean, to some degree, the personalized pricing is just a dramatically more sophisticated way of discriminating on a price basis than, you know, back then it was are you staying over a weekend or not, to distinguish between tourists versus business travelers.
So, there was all kinds of efforts to do exactly that. But it was just a lot more, I would say, with a sledgehammer instead of a scalpel they would try to separate business travelers from leisure travelers. And that’s how you fill a plane with perishable inventory basically. Where the last seat going out on that plane really you could sell for five bucks and that’s still good. But you just have to make sure that not everyone gets access to that five dollar fare, right?
TEDDY DOWNEY: Yeah. Yeah, I’ll be interested to see how I mean, obviously, you have unfairness laws at the state level. You have states pushing ahead with the personalized pricing bans and things like that. So, we’re certainly going to keep an eye on whether or not —
GENE BURRUS: I think the level of sophistication now, I’m not sure the law has evolved technically to address it yet. I think there was the idea floated last year by I think it was the Delta Airlines CEO who floated the idea of this kind of personalized pricing. And immediately, the American Airlines CEO jumped in and said we would never do that.
So, even though all of them probably do it to some degree, you know. Like I said, whether it’s trying to sort people out based on the nature of the fare they’re buying or how far in advance they’re buying, that sort of thing. That’s always been done. So, there’s always been a little of it. But this idea that you’d have to, like, try to disguise yourself to go buy a fare to get a good deal is new. It’s the technology. And I’m not sure the not sure the law is ready to deal with it, if it was clearly being done. That said, there’s obviously, I think, a lot of political reasons to think that if it became well known that it was being done, that it would probably result in legislation, either at the state level or at the federal level.
TEDDY DOWNEY: Yeah, I think, to the work that we’ve done, I think we’re pretty sure that it’s going on. I mean, you had that effort. What was the airline that got in trouble recently? We wrote about it the other day. But some airline had a tweet just oh, you’re having a persistently high price. Just clear your cache in your browser. JetBlue..
GENE BURRUS: Very, very interesting that. Whether that’s an admission or not is interesting. And that’s the problem too is —
TEDDY DOWNEY: I mean, I have people we’ll be next to each other looking at the flights in my family and be like, hey, it’s $600. It’s $450. I mean, it’s clearly going on. There’s enough evidence that it’s going on. I think it’s more a question of is it going to be a hard Section 1 case from a private plaintiff? We’ve looked into some of these intermediary data providers. I guess that was a question I had. Did you guys have data providers that were sort of these intermediaries back then? It sounds like you had a consent agreement. I had actually forgotten about that back then.
GENE BURRUS: It was actually an interesting time back then. Because if you think back then, the Internet was kind of in its infancy. You couldn’t really buy tickets on the Internet. It was ATPCO. And it was travel agencies. And I was part of the team that helped put together Orbitz back then, which was a joint venture by a few airlines to have an online travel agency that would work.
So, that was in its infancy. So, it was all done through Sabre and Apollo and ATPCO. And so, that’s the way things worked. There’s a lot more ways to get at the data now. And everybody’s doing searches through a variety of different places where data can be gathered and then attached to that particular person or that particular IP address. And then they can make their decisions on what they’ll offer you or not, unfortunately.
TEDDY DOWNEY: I mean, you mentioned a lot of these third-party players, but a lot of those have consolidated as well.
GENE BURRUS: Very much.
TEDDY DOWNEY: Orbitz is now consolidated in a big conglomerate of whatever. I don’t even know what those apps are even called at this point. Sabre was bought by Google, right?
GENE BURRUS: Yeah.
TEDDY DOWNEY: So, you had what sounded almost like a little bit of a competitive market in these intermediaries.
GENE BURRUS: Well, that was the idea, right? That the airlines didn’t like the fact they were basically subject to these booking fees from Sabre and Apollo. And so, that’s why they set out to kind of create an Internet thing. And then for a while, there was a lot of competition in the Internet space. And then, of course, they’ve consolidated them. I don’t know exactly what they think of the online, but my guess is that the airlines and Expedia are not friends right now.
TEDDY DOWNEY: Yeah, it’s just an interesting dynamic where when you were there, you had all these different players. And now it’s kind of four airlines, one online broker. The choice has diminished dramatically.
GENE BURRUS: Yeah.
TEDDY DOWNEY: Let’s talk about Spirit because we’re talking about I think it’s four companies that you mentioned, the four big airlines, control what? 80 percent of flights now? Spirit obviously plays — I want to get the terminology right ultra low cost carrier, right? Ultra low cost carriers obviously play a big role in constraining prices, even though they’re not really competing in the same way as the big four. I mean, even Southwest was a low cost carrier. And now it’s just one of the big players now. They solidified that by joining their peers and charging for bag fees.
GENE BURRUS: And picking seats in advance.
TEDDY DOWNEY: And picking seats in advance. And just generally making you miserable when you fly. I’m curious to get your thoughts on what’s going on right now with these ultra low cost carriers. Obviously, they’re struggling since COVID. Spirit has gone out of business.
I think the most obvious thing in many respects is the price of jet fuel going up most recently. But is it even viable with the big four being so dominant now and controlling airports and just having so much control over competition for anyone to survive as an ultra low cost carrier or as a sort of ancillary player in this market?
GENE BURRUS: It’s super hard, but I don’t think it’s anything new. When I was at American, the biggest part of my job, day-to-day, was defending the predatory pricing lawsuit that DOJ brought against American Airlines. And that was ostensibly the client the government had back then was called Vanguard Airlines. That was an ultra low cost carrier that popped up and tried to fly the Wichita, Dallas route. Now why is Wichita, Dallas important to American Airlines? It’s because every flight in and out of Dallas is important to American Airlines.
And so, the difficulty is, while they have lower cost structures both because of their labor costs are a lot lower and they tend to use older aircraft so their capital costs maybe are a lot lower initially they offer it, but they can only offer it on the local route, right? And so, American’s flights from Wichita to Dallas are filled with not only Wichita Dallas customers, but they’re also filled with Wichita to the rest of the world customers.
And so, they can push up capacity and lower the local fares without really necessarily hurting their profitability. And quite frankly, they have every incentive to do so. And so, it’s always been a difficult row to hoe just because of the economics that the hub and spoke system bring to the industry. And it’s hugely efficient and it makes for frequent daily flights, either one stop or nonstop, to lots of different places. And that’s just a much more attractive product.
So, they end up not being able really to compete that hard on price or they can’t fill their planes at a particular price. And so, they end up it’s a difficult thing to compete against. And I’m not sure there are laws that prohibit it. American prevailed in that predatory pricing case a long time ago. I think, because at the end of the day, the marginal cost of a seat is actually quite low when you think about it. And it’s hard to say that Americans shouldn’t be able to match their competitors’ prices. And so, that ends up what happens, I think.
TEDDY DOWNEY: Fuel prices are super volatile now and are just high in general, just given the war in Iran. How do you see airlines dealing with this? And then there’s this short term problem. And then I kind of want to take a step back after that and talk more structurally.
GENE BURRUS: So, they might try to coordinate price increases this summer, which it sounds like at least America and United floated that possibility to the industry. Different airlines have different fuel hedging strategies. So, some of them can start those only last so long, but they can smooth out the price fluctuations a little bit with fuel hedging. So, they might have a cost advantage over some of their rivals if they’ve made the right bets in terms of hedging on fuel costs.
But at the end of the day, prices are probably going to rise as a result. And they always rise faster than they come back down. If the war were to end tomorrow and fuel prices drop back down and oil went back down to 70 bucks a barrel, then my guess is you wouldn’t see the prices race to meet that, too, unfortunately.
But I think you’ll see a rise. The question is will it impact demand or not? And probably no one knows for sure the answer to that. But my guess is you’ll see a drop off in demand as a result. And then what they do in response to that will be interesting to see. Because for a long time, one of the bigger constraints on capacity in the industry is availability of new aircraft. Another consolidation in the industry is that there are only really two players making big jets anymore. And their assembly lines kind of dictate the capacity of the industry as a whole.
TEDDY DOWNEY: That’s interesting. I mean, we don’t spend a lot of time talking about the I mean, there is a lot of talk about Boeing and Airbus, but not in terms of like how they can dictate how many seats there are in the ecosystem.
GENE BURRUS: That’s literally the case. And when Boeing had the issues with the MAX 737s, that limited industry capacity for a long time. And you can go get you can go get planes out of the desert sometimes. And I don’t know where Spirit’s planes are going to go. Like I don’t know whether JetBlue had long term plans for Spirit’s physical aircraft or whether they were kind of on their last legs anyway. But there are limits to the capacity because of that constraint. Before I was a lawyer, I was actually an aerospace engineer working for McDonnell Douglas on MD-11s.
TEDDY DOWNEY: Wow.
GENE BURRUS: Before the consolidation, yeah.
TEDDY DOWNEY: So, I want to take a step back here because I think the popular media – or the business media I should say is like, oh, it was Lina Khan’s fault that she blocked the JetBlue-Spirit merger, which just feels totally disingenuous. (a) It was DOJ. (b) They declined to get bought subsequently by Frontier.
GENE BURRUS: Yeah.
TEDDY DOWNEY: And then Trump tried to bail them out and then or not bail them out, but come up with a plan and the debt holders rejected it. So, there’s just so much evidence that it had nothing to do with that merger getting blocked, which, of course, also was blocked in court by a conservative judge as being illegal. So, I find it hard to see how that was a problem. But you mentioned a lot of things already.
One, a lot of coordination, tremendous amount of consolidation. I will just say I’m curious if you agree the experience of flying as a customer, as a citizen in this country, is far, far more miserable today than it was in the 90s in almost every respect, I would say. What is the solution here?
We’ve even mentioned consolidation up and down the supply chain, in the manufacturers, in the intermediaries, in the data providers. I mean, the ability to coordinate, the ability to make you miserable as a customer, the ability to crowd out your competitors, just seems extreme at this point. So, what is the solution? Is it breaking them up? Is it re-regulation? I mean, you’ve even mentioned the DOJ. And also, I should mention the DOT.
GENE BURRUS: Yeah.
TEDDY DOWNEY: The DOT could step in when it comes to predatory pricing. They never do. The DOT could come in with rules to restrict these dominant firms. They never do. They could have more I mean, I think, Secretary Pete Buttigieg, did on the margins start to try to do some things to make you less miserable as a customer. But for the most part, we’re talking about tinkering around the edges. What needs to happen here for this market to be more competitive and make more sense?
GENE BURRUS: Yeah, it’s a very good question. If I had the answer, maybe I’d be Secretary of Transportation. There are some things that you can do, I think, to change the incentives. And whether it’s an act of Congress, there’s debates every now and then, and there have been for 30 years, over passenger bills of rights that Congress might pass that I assume DOT would be in charge of enforcing.
But there’s strong arguments against a lot of the things they might try to do in that regard. If you fly in Europe and you’re on it, you get delayed for six hours, you get a big fat check from the airline, right? And I’ve gotten one before, even if it’s on a U.S. airline that’s flying out of a European airport. That changes the incentives, right? And depending on the size of the incentives they can put in, it can either (a) make them build a lot more leeway into their schedules so they aren’t late or not, that sort of thing. There are a lot of things they could do in terms of compensating passengers that get bumped, and then they don’t oversell flights too.
And it just depends on the particular thing that is making you miserable on a given flight. And some of them have even been discussed, even at the level of do we get rid of TSA and go back to what we had before 2001 again in terms of airport security? There’s a lot of government employees that probably don’t think that’s a very good idea. But once upon a time, there was no TSA and that’s part of what makes flying miserable today too.
So, every little thing you notice that could be different. But I was having a discussion with somebody the other day, they’re saying, I’m just mad I have to pay extra for my Coke and for my bags, right? And if you like to drink a Coke and you like to check a bag, that’s true. But on the other hand, for me, if I’m not checking a bag and I don’t like a Coke, I like that I don’t have to pay for that anymore. So, for everything that’s making somebody else upset, it might actually be catering to a different customer.
And so, (a) it might not be as bad as we think it is compared to the history. Although, I think the capacity constraints and the coordination on pricing, there needs to be, I’d say, clear messages, whether it’s the DOJ says, you’re going to stop that or we’re going to sue you again and we’ll have another 15 years of a consent decree in place if that’s what you really want. Or whether it’s DOT going through some rulemaking and putting in rules that amount to what the APTCO consent decree was a long time ago, that would help. That would help.
And unwinding the consolidation, I just don’t know how they do it now is part of the problem, without introducing chaos into the system. And probably a worse flying experience, at least in the short run for everybody, if they did that. So, there’s no easy answer is what it comes down to.
TEDDY DOWNEY: We’ve got some listener questions. I want to make sure I get to. The first one is do you think the collapse of Spirit signals a shift away from all budget-friendly carriers? Or was that more Spiritspecific?
GENE BURRUS: I think it’s probably Spirit specific, just where they were in their life cycle and the way they had accumulated debt or run out of capital to some degree. That said, there is an old saying from back when I was in the industry that the way to make a small fortune in the airline industry is to start with a big one. And there’s always somebody with a big one that wants to go give it a try because it’s kind of like it doesn’t have perhaps the glamour that it had in the 60s, 70s, 80s that it does now. But you can go find a few airplanes and start thinking I can do better or offer something a little better. It’s been going on cyclically forever since deregulation, really. So, my guess is you’ll see new budget-friendly with lower cost structures, lower capital costs, that sort of thing that try to cater to the lower end. And there’s always somebody else willing to give it a try.
TEDDY DOWNEY: We’ve got another question here. Again, if you have questions, please put them in the Q&A panel or in the chat. Got a few questions coming in. Next question here. It’s not really a question. I’m not 100 percent sure what it means, but information inputs needed for dynamic pricing products. I’m guessing the question is around like when does this become a problem?
GENE BURRUS: And that may be related to what we were discussing before about the technology that has changed so dramatically and the access to information that airlines or data providers or search engines or others have about individual customers now is so dramatically greater than they had 25 years ago, that it has made dynamic personalized pricing possible and effectively possible.
And the question now is, either, is there a way to restrict the use of that data or do we want to? Because I guarantee you could have somebody on this podcast next week who’s an economist that would tell you how it’s the greatest how price discrimination in the airline industry is the greatest thing ever because it gives people with low propensity to pay access to that expiring inventory at a very low price, right?
TEDDY DOWNEY: There are no shortage of people trying to tell me how great dynamic pricing is. But then no shortage of people who I talk to about it who say that seems really unfair. So, I give economists a lot of credit for being perhaps the most out of touch.
GENE BURRUS: I’m not in that. I would be a victim of the higher pricing, exactly.
TEDDY DOWNEY: Another question here. Do executives at any of the major airlines regret deregulation of their industry, either in general or as executed?
GENE BURRUS: It’s a very good question. And there was sentiment, certainly at American Airlines, 25 years ago, that maybe we’d be better off if we just re-regulated the whole industry. Because there wouldn’t be all of these pressures on the executive suite every to make money every month. And so, there’s some of that.
I don’t think on the whole though that re-regulation (a) would improve things for people. It’s like, yes, perhaps the regulators are a little better educated about the dynamics of the airline industry and even the hub and spoke model, which didn’t really exist before deregulation. That has opened up thousands of markets that just couldn’t exist before.
The other thing that’s changed too is which is why I think still the deregulated market is the best way to take advantage of this is technology of the aircraft themselves, right? Suddenly, there are regional jets that are able to fly thinner markets on a pointtopoint basis and very efficiently, that those things didn’t exist. And so, the technology has changed too. Even the idea of we have wide body aircraft that are much smaller than a 747 was back in the 1990s, which can fly thinner international routes too.
So, all of those are illsuited for a regulator to come in and decide where people can fly and what planes can fly and what crews can fly, that sort of thing. I think while there is perhaps some sentiment of like, oh, it would be a very cushy job to have in a very cushy industry to be in, if we were just regulated and kind of guaranteed a return. We wouldn’t have to worry about all those things anymore. But I don’t think there’s that possibility really.
TEDDY DOWNEY: At what point do you think the bad results, subsequent to deregulation, will cause politicians to consider reforms? We’ve talked about mass consolidation up and down the supply chain. There are a lot of cities that have been decimated by the choice of executives at these airlines to abandon them or to dominate their hub and just increase the cost for everyone in that region. There’s been huge numbers of bankruptcies subsequent to deregulation that didn’t happen before.
I would argue the innovations have all been to, again, manipulate people and make them miserable for the most part. The technological advancement probably would have happened anyway. Or we’re actually not getting as much technological advancement because, as you mentioned, the two suppliers are an oligopoly that are making things worse, their engineering things worse, than they were historically.
So, pretty much every single shred of evidence since deregulation is that it’s been a failure, at least leaving it up to these executives to determine, and now they’re colluding out loud in a pretty lawless way. Is there, at some point, just a political outrage that this thing, that to most people seems like a utility, seems more like a railroad, than anything else in terms of like, I just want to get from point A to point B. I don’t want to be gouged. How can we do this more reasonably? I don’t want to be packed in like a sardine. I don’t want to pay for air in the bathroom and whatnot.
Actually, at some point, this just seems unsustainable that 30 percent price increases and then they’re going to be sticky because no one holds anyone accountable anymore it just seems like there’s going to be a reaction here. And even if your view is, well, I don’t see it happening, at what point is there a political reaction in your view?
GENE BURRUS: Yeah, I mean, if we see 30 percent price increases this summer as a result of the oil price increases, that’s going to get people’s attention. I can say Congress is always on the edge of we need a passenger bill of rights. I mean, your one Congressman having a bad delay or a bad experience on a flight back to their district, they’re going to get motivated to do something.
Honestly, historically, that’s the way a lot of the airline regs have come to pass. There’s a reason why you can fly from DCA to the West Coast now where you couldn’t in the 1990s. But John McCain didn’t like having to change planes to get back to Phoenix or didn’t like having to drive out to Dulles to get to Phoenix. So, they said low-cost carriers get special slots to come into DCA. And it was America West back then. But literally, it’s individual congressman’s bad experiences on flights that sometimes make stuff like that happen.
So, they aren’t necessarily price sensitive because somebody else is paying for their tickets back and forth. But I could see this summer being a key catalyst. And without a lot of partisan disagreement on it either. So, I think it’s always on the edge of happening. And I think you can see something happening.
Obviously, the airline lobbies would be very much opposed to anything like that. But whether it’s a passenger bill of rights that at least dictates things like what does ticket pricing have to include? What does it have to exclude? How do you not get surprised by junk fees or baggage fees or whatever the case may be? I could see that getting regulated again or being put to the DOT to do rulemaking on those fronts. And things like compensation for oversales and compensation for delays and things like that, I think that’s always on the back burner. And it won’t take much to get it on the front.
TEDDY DOWNEY: Another question here. Do you think there’s any impact on pricing or potential coordination via major firms like Vanguard or BlackRock that have common ownership of the major airlines?
GENE BURRUS: An interesting question. I think it’s a broader question that extends far outside the airline industry, actually, on their common ownership. And maybe sometimes whether it’s overlapping board seats or they have common board seats on maybe all of these companies in a particular industry. And the airlines are one of those. It certainly is something that has been studied a little bit by DOJ. I know Jonathan Kanter was very interested in that topic. Probably a little less interest now than there was a few years ago.
But it’s an issue that I think has some reason to be concerned about as the common ownership there’s always been rules against overlapping directors between competitors, but the common ownership kind of creates the same incentives, maybe just to a little bit of a lesser degree.
TEDDY DOWNEY: I’m curious, when you were there, I mean, I’ve certainly been, when I was at an investment bank, in the room at some of these meetings with these investors and the executives. And they definitely are unafraid to say maybe it’s not like we don’t like competition outright, but we strongly discourage you from getting in a price war or whatever they’re going to say. I mean, they did not seem shy at least when I was in the room. And I was in a pretty big room. So, I imagine when the room is smaller. What was your impression? Did you do any of those investor meetings when you were at the airline? Or does your view that can be a problem come from your personal experience in addition to the research that’s out there? Because I’ve seen the research too. But when I was there, I sort of —
GENE BURRUS: I’d say no. But I would say the degree of common ownership, it was the investment banks didn’t hold the sway, I would say, in the 90s, they do today. There were like California pension —
TEDDY DOWNEY: But when they set up the meetings, I mean, the investment banks ostensibly set up the meetings with I mean, I guess you could just get a meeting directly with the pension fund or BlackRock or Vanguard now. But those meetings where the investors are in the room, were the executives listening to that really?
GENE BURRUS: No, I did not experience that really.
TEDDY DOWNEY: So, yeah. Here’s another question. Do you see any mergers of existing airlines today that have not happened yet, but could benefit industry structure?
GENE BURRUS: It’s a good question. I mean, you could argue that Spirit Frontier might have at least helped a little bit. And they just got through the Alaska-Hawaiian merger. We’ll see how that either benefits or doesn’t benefit. That’s why I said four and a half. Does it make is Alaska-Hawaiian a and I’d probably say that with a little West Coast bias, that Alaska has got a lot more presence here than they do other places. So, it seems a lot more significant. But is Alaska-Hawaiian a potential fifth carrier maybe that will emerge out of all of this?
Other than that, it’s hard to see. I can’t see it benefiting the industry structure that any of the majors would be allowed to pick up, like American JetBlue or something like that. It just doesn’t seem like it would pass muster and I don’t see how it would benefit anyone.
TEDDY DOWNEY: One of the things that comes up a lot when you’re talking about the airlines is they make their money with credit cards and their relationship with banks. Last night, there was reporting that Roja Chopra is going to be the new California Consumer Protection and Business Regulation head of that new division. Do you think that a crackdown from the financial side on how airlines do points, the arrangements they have with banks, could be a pressure point or a potential risk to their business model, just given how reliant they are on those credit card revenues?
GENE BURRUS: I think it’s a threat. But I can’t see the politics that gets it done because the reason those programs are so effective for the airlines’ bottom line is people love them, right? I mean, people go out of their way to keep their frequent flyer miles and keep their loyalty points and make sure they have their lounge access and at least opportunity to get upgraded. If you’re going to tell people like, sorry, you’re just going to have to pick the lowest fare and go with the commodity carrier, people aren’t the frequent flyers will not like that, right? There’s a reason why those things are popular. It’s because they’re popular. So, the politics on that are pretty bad actually, I think.
TEDDY DOWNEY: Don’t they manipulate the value of the points though with like no accountability? And so, people certainly don’t like that.
GENE BURRUS: They don’t. And you could see some pro-consumer regulation, I guess, on maybe devaluating the points currency or something like that. Because everyone does experience that. But that said, it’s surprising how even sophisticated consumers are kind of just really, it turns out, paying a lot of money at the end of the day for not much. But the perception is different, even for very sophisticated consumers.
TEDDY DOWNEY: Any other thoughts — I know you’re more focused on tech policy now in your role. And you worked at Microsoft. You worked at Spotify. You’ve worked in tech for a long time, in addition to your work at the airlines. How do you see policy developing around consolidation more generally? And do you see any change more broadly in politicians being willing to take on consolidated industries?
I think there’s like an optimistic view for people who think there’s too much concentration where you look at Live Nation and you look at some mergers that are getting challenged at the state level. And then you say, well, at some point, Congress might switch hands and there might be more interest here. But I think you could take a much more pessimistic view and say, well, no one running for office right now is even willing to talk about AI because they’re so scared that AI will throw money into their race. No one will talk about cryptocurrency because there’s so money that crypto will throw money into their race.
And so, are you sort of an optimist that will get more competition enforcement and more competition in the tech and airline industry generally? Or a pessimist and it’s nothing but consolidated domination for the foreseeable future?
GENE BURRUS: I would say I’m an optimist and mostly because I think actually antitrust enforcement is a lot more bipartisan today than it ever has been in my entire career. And so, when I started as a baby lawyer back in the early 90s, I worked for a firm where everyone was a former antitrust lawyer that had to learn to be an environmental lawyer. Because the Reagan administration had kind of done away with antitrust enforcement. And there was a strong I would say the Republican Party back then stood for no, no enforcement. And if they could have gotten away with it, repeal of the Sherman Act.
But that changed dramatically in the last 10, 15 years, I think. And while it’s certainly not the same as the approach that Jonathan Kanter and Lina Khan took to enforcement, it’s not the same approach that the Trump administration has taken. But it’s a lot more consistent than it used to be when you changed administrations. Like, if you went from Joel Klein to Charles James, it was a 180 degree turn on antitrust enforcement. Now it’s more course correction now between administrations. So, I think it’s more bipartisan today than it ever has been.
TEDDY DOWNEY: And do you see that on your tech issues like? And where is that overlap? I think we’ve seen some of that from sort of the anti-monopoly movement on the left and this kind of new right coalition or new right thinkers in the Republican Party.
GENE BURRUS: Yeah.
TEDDY DOWNEY: Is that where you’re seeing the overlap on your issues?
GENE BURRUS: I think so. A great example is I’ve worked on the Google antitrust cases when I was at Microsoft. And then later, I was a consultant to the state AGs that were investigating the Search and the Android cases and the AdTech cases.
And we convinced Bill Barr at the DOJ under the first Trump administration to bring the lawsuits against Google, which that would have never happened under any other Republican administration. And then, of course, those cases were continued by Jonathan Kanter when he came in afterwards. And you’ve almost got a similar dynamic playing out now where Kanter brought a case against Apple. It’s not like the current administration walked in and got an immediate settlement out of the new AAG.
So, I think there is a lot of continuity. There’s maybe more agreement on the Section 2 side of things than there ever has been. Mergers are a different story, I think, where there’s probably a lot more tolerance for let them merge and we’ll see how it plays out. And competition will rise up if it was a bad deal. I don’t think that reflects reality necessarily all the time. And the airline industry is a perfect example of that, where the consolidation has not been met with replacement competition, where the markets are failing in certain respects. So, mergers less so, but Section 2 for sure.
TEDDY DOWNEY: Last question, and then we’ll let you go. Any mergers that stand out to you in the airline industry as particularly problematic, ones that already happened? Have we seen negative consequences? And that could be that you mentioned, it’d be hard to unwind them. But at least from your perspective, the ones that really push the consolidation over the edge.
GENE BURRUS: The big three are United-Continental, Delta-Northwest and American-USAir. I mean, those really are the ones that consolidated. Some others, there were smaller ones along the way that maybe led up to that. I mean, I was part of I helped get through the American-TWA. It wasn’t even a merger. TWA was about to about to close up shop, just like Spirit had. But those three in particular are and then the problem was, once one happened, then everyone pointed at that one and said, well, you need to let us consolidate to or we’re not competitive. And so, those three combined. that were all kind of justified by each other, I think is what really got us here.
TEDDY DOWNEY: Well, Gene, pleasure talking to you. Really, really interesting, wide ranging conversation. I’m excited to see what we will get out of antitrust enforcement in the airline industry going forward. And really, really can’t thank you enough for doing this today.
GENE BURRUS: Happy to do it. It was fun. Thanks.
TEDDY DOWNEY: And thanks to our audience and everyone for joining us. This concludes the call. Bye-bye.
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