Airline merger concerns justified, but late
An anti-trust suit filed Tuesday by the Justice Department and the attorneys general of six states, including Pennsylvania's Kathleen Kane, is on the mark regarding the negative impact on consumers of the planned merger of U.S. Airways and American Airlines.
The suit is odd, however, in that the Justice Department did not attempt to block huge mergers since 2008 that combined Delta and Northwest Airlines, United and Continental Airlines, and Southwest Airlines and AirTran. Those merged airlines, along with American and U.S. Airways, already control 80 percent of all U.S. air traffic.
European regulators already have approved the U.S. Airways-American merger, on the condition that the new carrier gives up some international slots at Philadelphia International Airport.
The Justice Department contends that the impending merger is different that the others because it would eliminate competition on more than 1,000 domestic routes now flown by American and U.S. Airways. That, in turn, likely would result in reduced service and higher fares on at least some of those routes.
Regulators cited Ronald Reagan National Airport in Washington as a primary example, in that the combined carrier would control nearly 70 percent of flights there.
Jobs, rather than service, primarily motivated states to join the suit. U.S. Airways has a flight operations center and other facilities at Pitsburgh International Airport that employ about 1,200 people, for example. Likewise, American is based in Texas and U.S. Airways is based in Arizona. Both states are interested in heading off inevitable job consolidations under a merged carrier.
The upside of the previous mergers is that they have helped to produce a financially healthier airline industry, through greater efficiency resulting from service consolidations and job reductions.
While the DOJ's concerns for consumers is admirable in this case, it's late. The previous mergers give other airlines little choice but to do likewise. The result might be a merger with concessions on certain routes and facilities, but don't expect the skies to get any friendlier.