The American Antitrust Institute (AAI) and Business Travel Coalition (BTC) sent to the U.S. Department of Justice (DOJ) in August 2012 a White Paper which aims to show that a merger between US Airways and American would not benefit the industry. A union between American, the fourth largest national airline, and US Airways, the fifth largest airline, would lead to the creation of the largest U.S. carrier with a combined share of over 20%.
AA changes course - under duress of course
Such a merger would lead to reduced competition on a number of routes, and would create regional strongholds at key airports in the U.S.A. In the same time, smaller communities would be left without important air service. Also, this union would impact the domestic U.S. industry leading to four powerful airline systems (American, Southwest, United Continental, and Delta) controlling more than 70% of the U.S. market.
“A US Airways-American combination poses potential concerns for competition and consumers,” explained the report’s co-author, Diana Moss, vice president of the AAI.
The analysis suggests that a DOJ investigation into the proposed merger should take in consideration the consequences of previous mergers such as Delta-Northwest and United Continental. The White Paper also raises the question of whether low-cost carriers would be sufficient in order for the customers to not be affected by the reduced competition and points out that the cost savings this merger is supposed to bring should be carefully analyzed.
“The merging parties bear a heavy burden in demonstrating that their merger would not be harmful to competition and consumers,” Moss concluded.
However, neither AAI, nor BTC make a recommendation in regards to the legality of this proposed merger.
