Airline merger comes under intense scrutiny over risks to consumer price competition and airport consolidation.
The Aviation Subcommittee of the Senate Commerce, Science and Technology Committee at a hearing on Wednesday, June 19, 2013, will discuss issues regarding the proposed merger of US Airways and American Airlines. Once considered a slam dunk for approval, this merger is now facing questions about competition and its effect on consumers.
“There are no benefits to this merger for consumers — US Airways and American Airlines routes have dramatic competitive overlap,” says Consumer Travel Alliance Director Charles Leocha, who will be testifying at the hearing.
“A merger will strike at airline price competition and have serious consequences at many airports where both of these airlines offer multiple flights,” he adds. These consequences may include layoffs for local mechanics, caterers and ground personnel as well as less price competition for consumers.
Previous mergers were consummated in the throes of financial disaster and a money-losing airline industry. This merger is being pieced together between two airlines that are in no danger of failing.
US Airways is coming off its most successful financial year ever and made record profits. American Airlines has billions of dollars in the bank, the largest aircraft order in the history of aviation, a low-interest financing package and its labor costs are under control.
Leocha asserts, “Both airlines can fly on their own wings.”
The Consumer Travel Alliance (CTA) study on overlapping one-stop routes released two months ago, changed the game with this merger. The Government Accountability Office (GAO) did its own study that showed the same results and the Department of Justice (DOJ) also when through the numbers that show far more loss of competition than claimed by the airline executives.
“With most mergers, airlines claim billions in synergies,” according to Leocha. “In this merger, there are no net new routes and airline estimates of possible savings have been disputed by Wall Street.”
Leocha finishes with a warning, “This is a merger of convenience. Airlines are coming together because they want to, not for the good of the public.”
The Aviation Subcommittee meeting will be held at 2:30 p.m. in room 253 of the Russell Senate Office Building on Wednesday, June 19, 2013. The hearing can be watched live or seen on video later at this link.
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.
