Tell me and I forget. Teach me and I remember. Involve me and I learn. Benjamin Franklin

Friday, November 15, 2013

The U.S. Airways-American Airlines merger is a go. Here’s why it maybe shouldn’t be.

By Steven Pearlstein

The Washington Post - November 12, 2013

Just three months ago, Justice Department antitrust enforcers sued to stop U.S. Airways and American Airlines from merging. Now, the parties have reportedly agreed a deal in which the Justice Department will allow it to go through in exchange for concessions from the companies. As the Post's Ashley Halsey reports, citing people familiar with the matter the deal "will require the merged airline to relax its stranglehold on Washington’s Reagan National Airport, one of the people said. The compromise will also force the combined company to give up slots at New York’s LaGuardia, Boston’s Logan Airport and Chicago’s O’Hare airport, among others, by the end of the year."
Back in August, Steve Pearlstein explained why the suit came to be in the first place--and those slots at Reagan National are a key part of the story.
For the last decade, the government has given the green light to a series of airline mergers for one basic reason:  the industry had fallen into a pattern of ruinous competition.  So many airlines were competing for passengers and market share that none of the old-line carriers could make any money. The only realistic choice for such “legacy” carriers was either to merge or go through another bankruptcy reorganization.

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