CEI Analysts: Let Airlines Merge, Markets Sort Out Winners, Losers

CEI Analysts: Let Airlines Merge, Markets Sort Out Winners, Losers

Transaction Would Assure Americans of a ‘Financially Sustainable Third Global Carrier’
August 13, 2013

WASHINGTON, D.C, Aug. 13, 2013 - Despite having allowed two huge mergers involving so-called “legacy carriers” in the last three years, the Department of Justice and six states have sued to block a proposed merger between American Airlines and US Airways. Analysts at the Competitive Enterprise Institute call on DOJ and the states to reconsider its decision and allow competition, rather than government, to sort out the winners and losers.

“The attack on the American Airlines-US Airways merger by the Department of Justice and a number of states is deeply misguided,” said Marc Scribner, Fellow in Land-Use and Transportation Studies at CEI. “A new American Airlines would be better positioned to compete with the other two legacy carriers and invest in fleet and airport improvements. On the heels of the successful Delta-Northwest and United-Continental mergers, this deal would offer travelers a financially sustainable third global carrier.

“Regulators’ obsession with mergers diverts attention from far more important aviation policy reforms that could actually greatly benefit air travelers. These include opening the domestic airline market to competition from foreign carriers, modernizing air traffic control, and improving airport capacity.”

Wayne Crews, CEI Vice President for Policy, added: “Yes, the merger would create the largest airline. But by blocking it, the Justice Department deprives consumers of the competitive responses of rival airlines, including other mergers, efficiencies, and new carrier entrance into underserved regions. Antitrust policy is supposed to aid consumers, not injure the expanding competitive process of which mergers should be a part.”