We can understand the rationale of the federal government and six states seeking to stop the merger of American Airlines and US Airways because of fears that it would reduce competition and thus drive up prices. After all, the merger would leave four airlines controlling more than 80 percent of the U.S. market. And consider that at an important airport such as Reagan National, serving Washington, D.C., 70 percent of the flights would be those of the new entity.
But the action could also end up with the unintended consequence of driving American Airlines and US Airways out of business. It’s not for nothing that U.S. regulators have approved three other big airline mergers in the past five years. The industry, until recently, has been under great financial stress. The market power of the new merged airlines, higher fares and the relentless creation of new fees have kept this essential public utility in the air.
To prevent American/US Air from merging could cause more trouble for travelers than it’s worth.
American and US Airways are now suing to get around the government’s action. They might well win, especially since the government has approved some of their competitors’ mergers. Unfair?
Meanwhile, the issue raises the question of whether the airline deregulation that started in the late ’70s should be at least partly reversed to ensure that non-hub airports have reliable service and to provide more order to what are the near-chaos and unpredictability of U.S. airline pricing and scheduling now.
Indeed, the unregulated market, while nice for a while because it encouraged fare cuts, has become increasingly problematic. It has made things a lot more difficult for individual travelers and businesses, whatever the costs savings on some flights (savings that seem to be disappearing these days anyway, amid high fuel costs, fare increases and ever more ingenious fees). It takes more and more time to navigate the ever-changing airtravel labyrinth. Time is money.
In travel and elsewhere, Americans could use some soothing simplification.
Policy makers would also do well to consider letting foreign carriers offer flights within the U.S. to help plug service holes and provide targeted competition where needed. U.S. airlines, after all, already have lots of international deals with foreign carriers, which are barred from offering flights between U.S. cities. The Europeans have the same sort of rules. The proposed Trans- Atlantic Trade and Investment Partnership, a sort of North-American-European Union common market, would provide a good environment for this.
— The Providence (R.I.) Journal
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