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The Airline IndustryThe commercial airline industry is a global network of airline companies that provide customers with seats on their flights in exchange for money, "miles," or "points." The global industry's publicly traded companies have a market cap of roughly $400B, with the top three US airlines by market cap being Delta (valued at roughly $47.9B), United (about $32.2B), and Southwest (about $20.1B) as of May 8, 2026.
Commercial airlines date back to the early 1900s, when the first commercial passenger airlines (like Florida's St. Petersburg–Tampa Airboat Line) were founded. In its early days, all fliers got the same level of service, as flying was a luxury that only the equivalent of today's first-class travelers could afford. But after WWII in the late 1940s, airlines began retrofitting cheaper military aircraft, packing in more seats, and introducing coach class to attract mass-market travelers.
As a result, differentiated pricing became the only viable business model. Today, most traditional airlines generate roughly two-thirds of passenger revenue from those in first, business, or premium economy classes combined. About 10% to 21% of their revenue stems from loyalty programs, and most earn no money on economy travelers, with the exception of budget airlines.Explore The Airline Industry
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Modern examples of oligopolies include the airline industryAn oligopoly is a market structure dominated by a few key suppliers. In the US, as of 2021, just four airlines (Delta, United, Southwest, and American) controlled nearly two-thirds of all domestic flights, making the US airline industry one example of an oligopoly. InvestopediaThe National Mediation Board handles labor relations for the airline and railroad industriesEstablished in 1934, this independent federal agency mediates disputes between airline and railroad carriers and their unions, conducts union representation elections, and helps with disagreements over existing contracts with the goal of keeping work in these industries moving ahead. USAFactsFind out how airline mergers created some of today's largest airlinesFour airlines dominate the US commercial airline industry: Delta, United, Southwest, and American. Many of these large companies secured their top spots in the industry via a series of mergers and acquisitions starting in the 1970s, when American acquired Trans Caribbean Airlines. Learn about the bodies that govern the US commercial airline industry, such as the FAAThe Federal Aviation Administration (FAA) regulates US air travel, monitoring both safety and advancement. But despite deregulation in the 1970s, the industry has other governing bodies, too, including the US Department of Transportation and the TSA. Smithsonian MagazineAirlines made an average of $13 per passenger as of 2025Some airlines, like American Airlines (which started the first airline loyalty program), have loyalty programs with higher valuations than the airline itself. The confusing business model of the modern commercial airline industry, including said loyalty programs, began after the 1978 Airline Deregulation Act in the US, which removed federal control over airline fares, routes, and market entry. The Wall Street JournalSee a visual of the largest airlines in the US by market shareAs of November 2024, Delta Airlines controlled roughly 17.8% of US airline market share, while American Airlines controlled about 17.5%, and Southwest controlled about 17.3%. Spirit Airlines, which would go on to shutter operations in 2026, controlled less than 5% of US airline industry market share at the time. Visual CapitalistThe North American waste management market was worth $208B in 2019Burning waste to generate energy is a $10B industry in the US alone. A growing number of major companies—including Amazon, Subaru, and American Airlines—are pursuing "zero landfill" sustainability goals. CNBCAn oligopoly is a market structure where a few large businesses dominate the entire marketWhen a few large companies dominate a market, changes in pricing for goods and services affect the entire market. Airlines are a common example of an oligopoly. Because the barrier to entry in the aviation industry is high, only a few airline companies offer the majority of the industry's services. While there is some competition, pricing across the board is largely intertwined and based on other companies' prices. Federal Reserve Bank of St. LouisAirbus is a rare European industrial success story that overtook a rival American firmAfter World War II, the US dominated aviation, particularly Boeing. To compete, Europe's major industrial nations pooled resources to form Airbus, a customer-centric airplane manufacturer. Its A320 family of planes became the most popular in airliner history, leading to profitability in the 1990s. Amid Boeing's major hurdles in recent years, Airbus remains the industry leader. Works in Progress
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