Postmortem evaluation of recent mega-airline mergers needed
19 March 2013, BRUSSELS, Belgium – Business Travel Coalition (BTC) today transmitted a letter to U.S. Attorney General Eric Holder and Transportation Department Secretary Ray LaHood signed by scores of corporate travel buyers, travel management companies and travel associations from twenty-four U.S. states and five countries outlining concerns over growing concentration in the U.S. airline industry in light of the proposed merger between American Airlines and US Airways.
BTC also provided the regulators an antitrust and industry analysis prepared by BTC and The American Antitrust Institute as well as BTC testimony before the U.S. House Committee on the Judiciary, Subcommittee on Regulatory Reform, Commercial and Antitrust Law. The letter will also be included in the record of today’s U.S. Senate Judiciary Committee hearing on the merger.
The letter’s signatories are not advocating blocking the merger. Rather, in reducing from 6 major network airlines to possibly three, over a brief period of airline industry history, they believe that it is imperative to broaden and deepen the antitrust review beyond relevant markets and overlapping routes. There is a unique opportunity and need to conduct a thorough forensic postmortem evaluation of the supportive analyses, projections and promises made regarding the then proposed Delta-Northwest and Continental-United mergers consummated in 2008 and 2010 respectively.
“A merger-approval decision needs to be informed by understandings gained from such an analysis regarding potential coordinated effects among competitors, monopsony power, pricing opacity and the lessening influence of low cost carriers as marketplace discipliners,” stated BTC Chairman Kevin Mitchell. “Were it determined that the proposed American-US Airways merger should be approved, structural remedies ought to be considered such as a minimum set of national consumer protections that ensures a private right of action in federal court and enables enforcement at the state level by state attorneys general,” added Mitchell.