Comments on: Here we go again: Airline merger madness, back in the news

By: Upgrade: Travel Better » Blog Archive » Reader mail: What will airline mergers mean to consumers?

Mon, 15 Jan 2007 00:17:44 +0000

[…] Ha! Well, Todd, as I’ve said before, on the “suck - rock continuum,” I think mergers are closer to “suck” for consumers. (See here and here.) Sure you might get a few more potential destinations or routings for your flights, but the total number of flights is bound to be cut, and prices in turn are bound to rise. Prices are already rising, despite oil prices dropping significantly in recent weeks. (Neil Bainton has the fare hike play-by-play.) With less competition, it’ll be easier than ever to raise fares and make them stick. […]

By: Better Living Through Miles

Better Living Through Miles — Sun, 17 Dec 2006 18:11:07 +0000

Rich:
It’s true, people in Milwaukee are quite fond of their airline. For example:
http://mydailyfatwa.blogspot.com/2006/12/takeover-conundrum.html

I haven’t followed Midwest, so I can’t comment on their viability as a standalone company long-term. But it would be sad to see their wider seats and warm cookies disappear.

By: rich (richmanwisco)

rich (richmanwisco) — Sun, 17 Dec 2006 01:47:03 +0000

and now, flying under the radar by comparison, is the offer by airtran for midwest. but certainly in line with the consolidation craze.

folks in milwaukee were always fond of the level of service and all business class seating, but it’s a model that has failed and all midwest will try to do now is seek a deal that best treats the shareholders.

By: Mark Ashley

Mark Ashley — Thu, 14 Dec 2006 15:34:29 +0000

Jason,

Thanks for your comment. As you might expect, I disagree. Here’s why:

Mergers may increase the size of an airline’s network, but the benefits of that expansion for the consumer, above and beyond existing alliances or codesharing agreements, is something I don’t see.

The disadvantages, on the other hand, are clearer. In every merger scenario, the airlines name reducing the number of planes out there, i.e., “capacity cuts.” That means fewer seats, thus leading to planes being more jam-packed than they already are, and higher prices.

Like I said in the post above, eventually other airlines will come in to fill the gap, but for the short term, prices are bound to rise. On some routes, you’re right, there’s enough competition to keep the prices in check, but the Southwests and JetBlues of the world want to raise fares, too.

Check out this article in today’s NYT. It has a quote from the CEO of AirTran, with regard to the Delta-US Airways merger. He’s in favor of the merger:

Mr. Leonard may relish his role as underdog but that is not why he hopes the carriers merge — he just wants to see fewer jets in the sky. After all, US Airways’ proposed takeover would reduce the two airlines’ combined jet fleet about 10 percent. That, in turn, would allow the merged Delta — and AirTran — to raise fares on many routes, significantly increasing profits. “It doesn’t take much,” he said.

And his enthusiasm is exactly why I am wary of these mergers.

By: Jason

Jason — Thu, 14 Dec 2006 00:28:27 +0000

I don’t see how airline mergers are anti-consumer. Yes they are good for Wall St and businesses, but anti-consumer I don’t think so. The ability to travel worldwide on one carrier is worth it to me. A United/Continental or a United/Delta (also mentioned briefly today) would create an airline with routes that span the globe and personally that is a lot better than using partner airlines when flying international. Will it drive up airfare in the states? I don’t think it will drive it up much more than if the airlines were to stay seperate. There is too much downward pressure on airfares from the likes of SouthWest, AirTran, and Jetblue for a merger to create a huge fare hike.