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‘New York Times’ Slams American Merger as ‘Unwise’

SmarterTravel

On Tuesday, the Department of Justice and would-be merger partners American and US Airways announced a settlement addressing the DOJ’s antitrust claims and clearing the way for the two airlines to proceed with their merger plans.

On Wednesday, the New York Times editorial board published “An Unwise Airline Merger,” the title of which succinctly reflects the board’s assessment of the merger.

Although any such opinionating is moot at this point, it’s worth considering the editorial’s two key points.

Insufficient Concessions

The Times‘ editorial first takes aim at the concessions at the heart of the settlement, dismissing them as “hardly sufficient to ensure the vigorous competition in the airline industry needed to keep fares down.”

Indeed, in the context of the industry overall, the divestures at Washington Regan and La Guardia, which comprise the bulk of the concessions, seem like a pittance. The Times points out that the divestures amount to just 15 percent of their combined takeoff and landing slots at Reagan National Airport, and a mere 7 percent of their slots at La Guardia Airport.

In its lawsuit seeking to block the merger the DOJ alleged that combining the two airlines would significantly diminish competition on more than 1,000 routes.

Industry Consolidation

But debating the merger’s merits on a route-by-route basis misses the larger point. As the Times argues: “The agreement simply ignores the central concern the Justice Department expressed in its lawsuit: the four big airlines—United, Delta, Southwest and the merged American — will have an even greater incentive to raise fares and fees because consumers will have fewer choices.”

The implication is that the DOJ not only failed in its duty to protect the best interests of the traveling public—an admittedly vague brief—it even failed to hold the carriers to the standards it laid out explicitly in its own antitrust lawsuit.

Reader Reality Check

Have your best interests as a traveler been served by the Justice Department’s settlement allowing American and US Airways to merge?

This article originally appeared on FrequentFlier.com.

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