AA-US merger could be “bridge too far” – expert

The planned merger between American Airlines and US Airways could be a “bridge too far” for the industry, according to a US aviation expert.

The planned tie-up, which would relaunch American Airlines as the world’s biggest carrier, was blocked this week by the US Department of Justice (DOJ), which argued that it would reduce competition and raise fares. And a leading US aviation expert has agreed.

Michael Ball, an airline specialist at the University of Maryland, said that following the recent mergers of Delta Air Lines and United Airlines with Northwest and Continental respectively, consolidation of the US aviation sector has passed the point where it benefits the passenger.

“Given the poor health of the airline industry, the various mergers over the past few years have generally benefited both the airlines and their customers. However, recently it has become clear that the major US carriers have been adjusting their historical strategies of seeking to maximise their customer base to strategies that generally restrict their service offerings in order to maximise profits,” Ball commented.

“Such strategies, which have led to a gradual increase in fares, are helped by the reduction in the competitive landscape brought about by the mergers.”

In his speech detailing the reasons behind the DOJ’s decision to block the AA-US merger, assistant attorney general Bill Baer said consumers would “lose the benefit of head-to-head competition between US Airways and American on thousands of airline routes across the country”.

“They will pay more for less service because the remaining three legacy carriers – United, Delta and the new American – will have very little incentive to compete on price,” Baer added.

And Ball agreed, calling the merger “a ‘bridge too far’ that noticeably dampens competition”.

“The [DOJ] is right to be concerned about the negative impact on passengers. The combined airline would have very strong competitive positions at certain airports and a near monopoly at Reagan National [in Washington DC]. There is perhaps a strategy the DOJ could pursue that requires the combined airline to reduce its position at some airports, but this might just be too complicated to work out in a reasonable time frame,” he added.

In the meantime, AA and US have vowed to “pursue all legal options in order to achieve this merger”.