Fri June 21, 2013
Report: US Airways Merger Could Increase Prices, Jeopardize Charlotte-Douglas
The merger of US Airways and American Airlines could have a greater impact than those airlines have previously stated, both on airline prices and on Charlotte’s status as a hub for US Airways traffic, according to a new government analysis of the merger.
US Airways and American Airlines leaders frequently cite the following statistic: of their combined 900 routes, only 12 overlap. A review by the Government Accountability Office confirms that stat—for non-stop flights. If you look at all flights, though, the report says about 1600 flights overlap.
The loss of competition on those routes could impact ticket prices, says Charlie Leocha, director of the Consumer Travel Alliance.
“Those airlines compete like mad with each other right now,” Leocha told a Senate Commerce subcommittee. “That competition’s going to disappear.”
A GAO official responded by pointing out that on most of those 1600 overlapping routes, the merged airline will still have at least one competitor. The GAO analyzed the deal in anticipation of a Justice Department review later this year, where the agency will look for anti-trust concerns.
The report contains one other tidbit for Charlotte residents. Charlotte-Douglas could face competition as a hub with Miami International Airport. Charlotte is one of US Airways’ major hubs, while Miami is American’s. The report says that Miami already serves more than half the destinations to which Charlotte-Douglas connects.
“If approved by DOJ, the combined airline could be expected to rationalize its network over time, including where it maintains hubs,” the report reads. “For example, New York could serve as a better hub and international gateway than Philadelphia in the Northeast, while Miami could be a better hub than Charlotte in the Southeast.”
US Airways spokesmen say they plan to retain all the current hubs. CEO Doug Parker gave himself a little more leeway at the Senate hearing.
“We’re being extremely careful not to make any promises, but rather to tell people what we know at this point in time about what we believe is going to happen,” Parker said.
The GAO report points out that “closing hubs is not unprecedented.” St. Louis, Cincinatti, and Memphis all lost their hubs in previous airline mergers.