Airline Mergers Have Already Led to Higher Fares.

[elleng]

The government is putting its foot down on rising airfares and fees by blocking the latest airline merger — but for fliers, it's already too late.

The past decade has seen the largest transformation of the airline industry in a generation. Prior to 2005, there were nine major U.S. airlines. Today, just five.

The merger of American Airlines and US Airways would bring that number down to four. But Tuesday, the Department of Justice moved to block the deal, saying it would cost consumers hundreds of millions of dollars a year in higher fares and extra fees.

But even before this, the cost of flying had gone up for consumers as the industry consolidated. The average cost of a roundtrip domestic ticket — including baggage and reservation change fees — grew to $378.62 last year, up from $351.48 in 2008, when adjusted for inflation. . .

The latest round of consolidation started in 2005, when America West bought US Airways out of bankruptcy, taking its name. Then Delta and Northwest merged in 2008, followed by United and Continental, and Southwest and AirTran. All of those easily won the blessing of antitrust regulators — the first two under President George W. Bush, the second pair under President Barack Obama.

Andy Brennan, an analyst with IBISWorld, said the government approved those deals to save the then-struggling industry. Now that the airlines' health has improved, regulators are more concerned about airfares.

http://www.nytimes.com/aponline/2013/08/14/business/ap-us-airline-mergers-consumers.html?hp


Have we seen such issues discussed in msm in recent memory? History?

[gopiscrap]

1. Yup more corporate greed coming our way

and fucking DOJ will probably lay down and die and let it happen!

[elleng]

2. Seen this?

http://www.democraticunderground.com/1014564744

[gopiscrap]

3. yeah I saw it but that's just posing

when comes time to do something they'll lay down and get walked on..why: campaign contributions. It's all about lining pockets and power!

[elleng]

4. This IS doing something:

'The Justice Department, along with the attorneys general of six states and the District of Columbia, filed a lawsuit on Tuesday seeking to block the proposed merger of American Airlines and US Airways. . .

But antitrust regulators said these past mergers had in effect undermined the case for the American-US Airways combination. . .

In arguing against the merger, the Justice Department said the vast majority of domestic airline routes were already highly concentrated. The merger, it said, would result in four airlines controlling more than 80 percent of the United States market for commercial air travel.

“We looked very carefully for six months at this deal, and we think it’s pretty messed up,” said William J. Baer, the assistant attorney general in charge of the department’s antitrust division. “It looks pretty bad for consumers.”

He told reporters that the merger could cost consumers “hundreds and hundreds of millions of dollars.”

He said regulators reached that conclusion after reviewing internal plans for the merger at US Airways and American and studying how much fares rose after the other giant mergers.

Asked if some type of compromise might still be possible, Mr. Baer said, “We think a full-stop injunction is the right course for the consumer.”

Mr. Baer said the combined airline’s pricing power would be apparent at Ronald Reagan National Airport near Washington, where it would have a monopoly on 63 percent of the nonstop routes. . .

Mr. Baer, who took over in January, has demonstrated that he is not afraid of taking a fight to court, analysts said, as he did this year with the case in which the department charged that Apple colluded with publishers over e-book pricing. Last month, a federal judge agreed, ruling against Apple. . .

In laying out its case, the Justice Department quotes US Airways executives describing how consolidation had helped the industry raise fares. It also discusses how US Airways provides some low-fare competition through its Advantage Fares program, saying that other carriers, including American and Delta, routinely matched those lower fares.

The Justice Department also explained how American could exit bankruptcy as a “vigorous competitor” without the merger, saying it would have “strong incentives to grow to better compete with Delta and United.” As an example, it cited the carrier’s large new aircraft order and said that American’s stand-alone plan called for increasing flights and destinations.'