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Proposed American Airlines-US Airways merger needs federal scrutiny

The deal to create the world’s biggest airline would be a boon to the companies but might be a bust for consumers

Published: March 2013

American Airlines and US Airways exchanged valentines on February 14, announcing an agreement to merge operations and become the biggest airline in the world.

Federal authorities and the bankruptcy court overseeing the restructuring of American Airlines must approve the deal, which would leave the U.S. with four airlines—American, Delta, United, and Southwest—in control of 87 percent of the nation’s airline seats, according to an industry analyst.

That’s an unprecedented level of market concentration in the modern era of American commercial aviation.

As part of their pro-merger pitch, American Airlines and US Airways argue that travelers will benefit from a stronger, wider-reaching airline that’s more determined and able than ever to compete vigorously. We heard the same pitches when United and Continental merged, when Delta and Northwest merged, when US Airways and America West merged, and when American acquired TWA’s assets in bankruptcy.

But what often emerges from these deals is not greater choice or better value for consumers.

If American and US Airways are allowed to merge, passengers could once again see fewer flights and fewer choices, with higher fares, lower quality of service, and airport hubs getting downgraded or abandoned, among other downsides. This industry consolidation could also make it harder for low-cost airlines to compete effectively and push the biggest airlines even further into “too-big-to-fail” territory.

The House of Representatives recently held a hearing on the merger, and the Justice Department’s Antitrust Division is asking for more details about the deal. These are encouraging signs that Washington is taking concerns about the merger seriously.

This big, far-reaching deal demands a serious amount of attention. We strongly urge the government to give the merger a thorough top-to-bottom inspection before it’s allowed to take flight.

This feature is part of a regular series by Consumers Union, the public-policy and advocacy division of Consumer Reports. The nonprofit organization advocates for product safety, financial reform, safer food, health reform, and other consumer issues in Washington, D.C., the states, and in the marketplace.

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