US Airways-American merger study says risk of fare increases high

US Airways passengers check in at Sky Harbor International Airport in Phoenix.
Cheryl Evans/The Republic

By Ryan Randazzo
The Republic | azcentral.com
Mon May 6, 2013 5:09 PM

US Airways and American Airlines officials have bragged that their pending merger should not face much regulatory scrutiny because the airlines only share a dozen of their 900 routes.

RELATED CONTENT: Other study says mergers don't raise fares

But a new study commissioned by the Consumer Travel Alliance, a nonprofit consumer travel rights group that is pushing the Department of Justice to take a close look at the deal, says that hundreds of flights will be at risk of fare increases.

The airlines officially announced a merger in February after months of negotiations amid the bankruptcy of American’s parent company, AMR Corp. The deal should close by October, and airline officials said they will begin making operational changes shortly thereafter.

The CTA study says that the airlines have 761 common connecting routes, and that if the merger goes through, the new American will be able to raise prices on those flights because it will have less competition.

“Consequences to airline competition could be dramatic,” Consumer Travel Alliance Director Charlie Leocha said in a statement. “Far from being an all-but-benign combination of airline routes, this merger has the potential to clobber competition in hundreds of markets across the country.”

The CTA gave some examples of flights where competition would decrease through the merger:

— San Diego to Tampa: US Airways flies between the cities with stops in Phoenix or Charlotte. American flies between them with a stop in Dallas.

— Albuquerque to Boston: US Airways connects in Phoenix and American connects in Chicago or Dallas.

The study says that 40 percent of American’s connecting routes and 30 percent of US Airways’ have overlap. After the merger, other carriers will have to compete with a stronger airline.

“The Consumer Travel Alliance study suggests that this does not bode well for consumers as this all but guarantees higher prices between those connecting markets,” Leocha said.

Officials from both airlines have said they would benefit from about $1 billion in savings by combining the companies, and that if merged, they intend to maintain all of the hubs, including in Phoenix, that exist today.

They also have said that because the two carriers have so few common routes the deal should easily gain regulatory approval.

“Based on what we know about how complementary these networks are, we don't expect any (regulatory) issues,” US Airways CEO Doug Parker said when the merger was announced.


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