Over the years, the landscape of the commercial aviation industry in the United States has undergone significant transformation, characterized by the gradual expansion and consolidation of airlines.
Currently, the top four airlines dominate nearly 70% of the domestic market, showcasing a remarkable level of market concentration.
According to simpleflying.com, the process of the industry becoming so consolidated did not happen overnight, and dozens of mergers have taken place over the decades that have created larger and larger airlines.
There are dozens of reasons why two carriers may choose to merge, and in many ways, they are inevitable forces that help the market adapt and grow over time.
Nonetheless, a headline merger will have a wide-reaching impact on the industry as a whole immediately and could bring along any number of positive or negative benefits to the consumer. In this article, we will take a deeper look at five key mergers that helped shape the airline industry today and the impact that each has had on the US market.
American Airlines and Trans World Airlines (TWA)
Year: 2001
American acquired a struggling TWA for a $745 million payment
TWA was assumed to have assets of over $2 billion at the time
In April 2001, American’s parent company acquired the assets of a bankrupt TWA, which had entered Chapter 11 protection for the third time. TWA ended its operations on 1 December 2001, with a flight from St. Louis to Kansas City.
American Airlines quickly absorbed the TWA brand, and some aircraft featured a mixed livery during the transition period. American downsized some of TWA’s hubs in order to prioritize traffic through legacy hubs like Chicago-O’Hare International Airport (ORD).
As one of the largest airlines today, this merger greatly expanded American’s footprint. The carrier gained a number of new routes across the Midwest and multiple connections across the Atlantic to Europe.
2 Southwest Airlines and AirTran Airways
Year: 2010
Southwest acquired AirTran for $1.4 billion
The two carriers were fully integrated in 2014
Southwest Airlines announced its acquisition of AirTran Airways in 2010, expanding its presence in major cities like Atlanta and Milwaukee. The purchase also helped Southwest enter multiple high-demand international markets like Cancun and Montego Bay.
The merger process took four years, with Southwest first bringing AirTan’s 737-700 fleet into its own and leasing out Boeing 717s to Delta by mid-2013. The carriers continued operating separate flights until 2014, when the final AirTran flight departed, marking an end to the company’s history. Southwest now stood alone as the largest player in the massive low-cost market.
3 United Airlines and Continental Airlines
Year: 2010
While United Airlines originally attempted to merge with Continental in 2008, the agreement was not approved until 2010. At the time, the merger was set to create the world’s largest airline and adopt Continental’s logo while retaining United’s name.
The two carriers began the lengthy integration process in 2010, and by October of that year, they had officially merged to form a single entity. The newly formed airline was renamed United Continental Holdings (later becoming United Airlines Holdings), becoming a powerhouse with hubs on both coasts.
4 American Airlines and US Airways
Year: 2013
American’s second major merger in just over a decade saw the carrier take over US Airways, one of its largest rivals. The airline phased out pre-existing callsigns that had been in place since US Airways’ merger with America West.
American quickly phased out the US Airways brand, with the final scheduled flight taking place on 13 July 2015 between Philadelphia and San Francisco. Notably, the last flight stopped at major American hubs, including Phoenix and Charlotte, but not US Airways’ legacy stronghold of Pittsburgh, something which caused controversy, according to Tribune Total Media.
According to the Department of Transportation’s statistical database, American Airlines maintains a 17.2% share of the United States domestic market, a number largely attributable to the carrier’s mergers over the years, including its largest with US Airways. Key US Airways hubs such as Philadelphia, Phoenix, Charlotte, and Washington-National remain major elements of American’s route network today.
5 Delta Air Lines and Northwest Airlines
Year: 2008
The most important merger to have taken place in the last few decades is likely the one that saw Delta Air Lines drastically expand its network. Furthermore, the carrier’s acquisition of Northwest Airlines saw the company nearly double in size, and kicked off a large wave of corporate consolidation across the United States.
The merger, despite its size, faced few regulatory hurdles as the carriers did not compete directly and, for the most part, the consumer would not be affected. Officially, the two carriers were fully merged on 31 December 2009, when the final Northwest Airlines service took place.
Delta Air Lines today remains the largest player in the United States market with a share of 17.8%, a number that has continued to grow over time. Delta’s route network and fleet both offer strong reminders of the former Northwest Airlines, despite closing some of the carrier’s legacy hubs like Memphis International Airport (MEM).
