The very first thing I started subscribing to and reading regularly about the business of aviation was Holly Hegeman’s PlaneBusiness about fifteen years ago. I’m not sure I stumbled upon it, but it was well worth the fee I paid at the time. And oddly enough I think it was through Holly’s website that I stumbled upon Flyertalk.com for the first time. Without that I wouldn’t be writing this blog, or have had the chance to co-found Milepoint.com.
Last month Cranky Flier contributed a piece there that looks at the underlying data in the Government Accountability Office’s review of the proposed American-US Airways merger. It turns out the much of the analysis isn’t very good.
Cranky had to create his own data set. GAO apparently outsourced the data work and won’t make the supporting data for its study available. However, he got close enough to be able to figure out what’s going on.
The GAO study found 1,665 airport pairs would lose an effective competitor, though the vast majority of those would still have other effective competitors. They found 210 markets would gain a competitor.
- 70% of markets losing a competitor would still have 3 or more effective competitors. In some cases, the US Airways-American combination creates stronger competition (since both airlines are weak in the market but would compete more effectively against other airlines if they combined).
- The GAO analysis included over a hundred cities as ‘losing a competitor’ where you don’t even have service from both US Airways and American today.
- The analysis ignores service from alternate airports in the same city, even though they acknowledge standard practice is to look at city pairs and not service between specific airports.
- More than a quarter of the most severely impacted markets are to St. Croix.
Where does that leave us? It leaves us with a grand total of 4 markets that would be truly impacted by the merger. There’s DFW to both Philly and Charlotte, Charlotte to St Thomas, and DFW to Palm Springs.
From a consumer standpoint I really wanted American to remain a standalone airline. I’ve liked the direction they’ve been heading since filing for bankruptcy, building a branch and niche as an upmarket carrier. I don’t expect that positioning to last under US Airways maangement.
But realistically there doesn’t seem like there’s all that much to the competition concerns here, although fewer airlines in the market won’t likely increase competition overall.
Definitely read the whole thing.
And no wonder American and US Airways are pushing for a speedy trial, months ahead of the schedule that the Department of Justice is looking for — they actually think they can win on the merits.