An interesting session in the U.S. Senate yesterday. As reported by the Dallas Morning News, the Government Accountability Office offered an analysis at a subcommittee meeting on aviation suggesting the American/US Airways merger “will reduce competition for 1,665 flight choices affecting 53 million passengers.”
Loss of Connecting Flights
While it appears to be true that the two carriers only overlap on 12 nonstop routes (as American and US Airways have repeatedly said), now it’s connecting flights that have caught the attention of the GAO which offered analysis showing the merger would result in the loss of an “effective airline competitor” in 1,600+ city-pair markets. In fairness, the GAO also noted that the merger would create a new effective competitor in more than 200 city-pairs but there’s already competition in most of those markets.
The Codeshare Wrinkle
FareCompare readers already knew there’d be losses thanks to data on codeshare flights provided by airfare analyst Rick Seaney – but these losses involves US Airways and its fellow alliance member United. According to Seaney, the following changes can be expected in January 2014:
- US Airways passengers will lose about 540 nonstop routes flown by codeshare partner United
- United passengers will lose about 250 nonstop routes flown by codeshare partner US Airways
Pros and Cons of Mergers
Loss of competition often leads to higher airfares, but there’s another side to the story. The airlines say they need to merge if they are to continue to compete against the other guys meaning the previously-merged legacy carriers Delta (merged with Northwest) and United (merged with Continental). And it may not be a matter of competition alone – the ultimate survival of emerging-from-bankruptcy American could depend on merging. As it’s long been noted, airlines that go out of business can’t get travelers anywhere at any price.
As USA Today reports, the airlines hope – and at this point, certainly expect – that the merger will be officially done sometime later this year, but “the Justice Department, American’s bankruptcy judge and company shareholders must still sign off.”