Algorithmic Collusion in the Skies: The Role of AI in Shaping Airline Competition

Since the mid-2010s, U.S. airlines have implemented and expanded the use of artificial intelligence (“AI”) in a variety of capacities. Given the industry’s oligopolistic market structure dominated by a few major carriers, AI-driven pricing algorithms may raise antitrust concerns due to their potential to facilitate coordinated pricing and tacit collusion. This paper reviews recent developments in the economic literature on these issues and examines the mechanisms through which AI-dri