US Airways, American Merger Probably Means Higher Prices

Photo (cc) by RHL Images

The federal government will let slide a merger between U.S. Airways and American Airlines.

It feared going to trial would cost jobs in cities dependent on airports, Bloomberg Businessweek says. The merger will create the world’s largest carrier, and as with many cases when competition is reduced, higher prices could be the result.

But a few good things may come out of it. To get regulators off their back, for instance, American and US Airways will have to sell access to dozens of landing slots or gates at major airports, including Ronald Reagan National, La Guardia, Chicago O’Hare International, Los Angeles International, Boston Logan International, Dallas Love Field and Miami International.

“Regulators will get to say which airlines gain the access lost by the merged giant, and so far it has been made very clear that legacy rivals like Delta and United aren’t welcome,” Businessweek says. That could mean new routes or more flights from Southwest, JetBlue, and others. When that has happened in the past, it actually reduced fares for those flights.

“When Southwest Airlines acquired 36 slots at Newark Liberty International Airport as a condition of the United-Continental merger, it added six nonstop flights from Newark with connections to 60 other cities,” The New York Times says. “Fares dropped by 10 percent on the nonstop routes and passenger traffic rose by 36 percent.”

The merger could close by mid-December, and the new American Airlines will operate 6,700 flights per day, the Times says. Will you be flying American? Comment below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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