Travelers may wonder whether it makes sense to let American Airlines and US Airways merge into the world’s largest carrier.
A new mega-airline, with the American brand name, would have more flights on more routes and could charge higher ticket prices on at least some. This would appeal to business travelers who generally favor convenience and comfort over price.
If the airlines don’t merge, they might offer lower prices but could ultimately be forced to cut routes or go out of business as they try to compete with much larger United and Delta, themselves the products of mega-mergers over the last few years.
Business travelers, who spend two or three times as much as those flying for fun, are likely to lose out if the merger fails, since there would be no third alternative to the large domestic and international route networks offered by United and Delta.
“If you’re a corporate traveler, you’re basically going to be faced with two stalwart airlines, Delta and United, and you’ll have actually less choice at the corporate level than you did if this merger would occur,” said Andrew Davis, an investment analyst with T. Rowe Price, which owns airline shares.
The merger “certainly was not looked at from that perspective” by the government, Davis said.
The U.S. Justice Department sued Tuesday to block the $11 billion merger on antitrust grounds, arguing that allowing the fourth large U.S. airline merger in five years could lead to higher ticket prices and fewer choices for consumers. The airlines are girding for a court fight.
The American-US Airways merger would cap a wave of consolidation that has helped return the industry to modest profitability after the 2008-09 economic downturn. Delta Air Lines acquired Northwest in 2008, United Continental was formed in 2010 and Southwest bought rival AirTran in 2011.
Southwest and other smaller airlines use a different business model, offering many direct domestic flights rather than hub-and-spoke connecting service.
U.S. government data show that on an inflation-adjusted basis, average air fares are lower than they were 15 years ago but have moved up modestly since 2007, largely due to a more than 40 percent rise in fuel costs over the last six years. “This has not been skyway robbery,” George Hobica, president of AirfareWatchdog, an airfare alert and travel advice service, said of rising air fares.
But airlines also have added charges for baggage, food and other services, making it more difficult to say whether travelers are better off over all.
Airline analysts and consultants said the DOJ complaint reflected government misunderstanding of how the industry operates and how it has changed. American Airlines, the No. 1 U.S. carrier before the spate of mergers, is now third, behind United and Delta.
The Justice Department contended that American and US Airways, the fifth-largest U.S. carrier, have posted improved financial results and can survive as independent carriers.
Robert Mann, an airline consultant in Port Washington, N.Y., responded that without the merger, American could ultimately be squeezed out of new business accounts.
“You get corporate accounts chiefly because you have the best network,” Mann said.