Published in USAToday, February 12, 2012, on the editorial page.
Antitrust laws were designed to protect consumers. The potential merger between American Airlines and US Airways presents no compelling consumer benefits.
Competition will suffer. There will be just three major network airlines. All-in prices (airfares plus extra fees) will go up, and services will be reduced — all for a merger that is unnecessary for the long-term survival of either airline.
From the passenger’s point of view, there are no reasons to combine these airlines — no new routes, no new competition, no savings that can be passed on to consumers. Even if there were savings claimed by merger synergies, those would be overwhelmed by the negative consequences of reduced competition, higher airfares, reservation system meltdowns and increased labor costs.
To be clear, there is benefit in a financially viable air transportation system. However, there is no industry need for this merger. Most past mergers were forged to help a troubled airline benefit from linking with a better-run company. In this case, neither company is in danger of collapse. US Airways enjoys record profits, and American is emerging from bankruptcy protection with billions in cash and major new aircraft contracts.
The recent record of government watchdogs at restraining mergers, code-sharing, airline alliances and joint ventures suggests this merger is inevitable. If, indeed, this merger is approved, there will be an immediate need to re-inject competition into our aviation system. Here are some remedies that should be considered:
• Mandate full disclosure of extra fees charged by airlines so that consumers can efficiently comparison-shop the full price of travel, and purchase airfares and fees in one place.
• Instruct airlines to add customer service plans to their contracts of carriage.
• Consider allowing foreign carriers on domestic routes, especially smaller city
routes abandoned by domestic carriers.
These remedies would help to mitigate for consumers the worst effects of further industry consolidation.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
