The biggest surprise from the DoJ settlement with American/US Airways

There isn’t one.

Those who are claiming surprise that the merger was approved or that, at the end of the day, the objection was about slots haven’t been paying much attention to the market lately. Yes, fares are trending upward in the industry (still not necessarily higher than in the past) but I’m also not completely convinced that the move is bad for consumers. Yes, low cost is important but affordable and stable is arguably more valuable to a consumer than cheap and unstable. I’m not necessarily happy that fares are going up for my personal travel expenses, but I also don’t completely see it as a failure of the DoJ (or any other group) in protecting consumer interests overall.

The loss of 44 flights (52 slot pairs but 8 are already leased to JetBlue) at DCA is a pretty significant chunk of the portfolio to be trimmed, near 20% of their total flights there. That’s more than US Airways acquired in their trade with Delta in 2011. In other words, Delta got a bunch of slots at LaGuardia – another airport AA/US will have to divest at – and US Airways gets to merge with American Airlines and give away the slots they earned in the past trade. Delta sure looks like a huge winner there. Oh, and Delta seems inclined to bid on the slots, assuming they’re permitted to by the DoT.

The numbers are slightly more tempered at LaGuardia, where less than 10% of the slots will be lost. Still a chunk to give up, but not so much that it will truly alter the operational footprint there. It also is somewhat unclear why that level of divestiture is needed given the relative size of the operations the combined carrier will have relative to others there, but such is the way the DoJ operates.

Yes, the two carriers will make concessions to get their merger approved. That won’t really prevent higher fares or even reduced service in some markets (though some markets are guaranteed continued service as part of the agreement). And it won’t necessarily mean that everyone sees improvements. But that’s also not really what consumer protection is about. After all, it is rare for any change to benefit everyone.

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, and LinkedIn.

One Comment

  1. Not only does US lose all the slots they acquired at DCA, they also gave DL half of their terminal at LGA, which looks like a terrible decision now as the US terminal would have been much better for the combined operation than either a split operation or attempting to consolidate with AA in the central terminal where they also have to deal with UA, AC and many others.

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