This bird has flown
There are somewhere around 50,000 airline flights that take off and land around the world every day. Chances are, if it’s sunny and clear, you will see contrails crossing the sky no matter what time of the day you look.
None of those planes are being piloted by TWA, American West, Northwest or Continental, however. All of these venerable, once high and mighty airlines have been swallowed up in mergers and acquisitions. Though there has been a spate of such consolidations in recent years, winnowing down the options consumers have when planning their trips, it was only this week that the U.S. Justice Department threw down the gauntlet, proclaimed enough is enough, and sued to stop a planned $11 billion merger between US Airways and American Airlines that was announced in February.
They were joined by six states, including Pennsylvania. U.S. Rep. Tim Murphy and U.S. Sen. Bob Casey are among the political figures who agree that the merger should be seriously re-examined. In a statement, Murphy contended it could result in “significant job losses” and “stiff the region’s taxpayers, who funded the bailout of the Pittsburgh International Airport based upon unfulfilled promises from US Airways of growth in the region.”
Those who say that the merger should not happen have worthwhile arguments to make. A marriage between US Airways and American Airlines would essentially leave four carriers offering service across the country, and if that’s not a monopoly, it’s getting awfully close to being one.
Opponents of the merger also argue that it will lead to higher fares and frills disappearing from flights. Legroom might become even tighter – if such a thing is humanly possible – and the price for pillows might get a bit uncomfortable. But if your choices are few or nonexistent and you need to get to Omaha, Neb., quickly, then what option do you have?
But there’s a second side to this equation – the federal government has signed off on the mergers of Delta and Northwest Airlines and United and Continental Airlines in the last five years. Why should this merger pose any more of a threat to consumers? As Scott Mayerowitz of the Associated Press pointed out after news of the suit emerged, the average price last year of a roundtrip domestic ticket was $378, while it was $351 in 2008 when adjusted for inflation.
A union between US Airways and American Airlines would also liberate American from bankruptcy protection and make US Airways a player on the global stage. If the Justice Department and the states succeed in derailing the merger, all that might be gained is a small US Airways and a defunct American Airlines. In the face of the mergers by their competitors, the two airlines might very well have no other avenue to pursue if they want to survive.
And North American airlines have hardly been alone when it comes to mergers – European carriers, such as Air France and KLM, have also joined forces in recent years.
Savanthi Syth, an airline analyst, told Mayerowitz, “It’s too late. It’s already a very consolidated industry. I don’t know if you want to stop an industry from being profitable.”
Whether the antitrust suit will succeed remains to be seen. But where airline mergers are concerned, it seems appropriate to borrow a phrase from the Beatles song “Norwegian Wood” – this bird has well and truly flown.