US Airways-American Airlines deal may mean higher prices: experts

Wed Nov 13, 2013 6:46pm EST
 
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By Karen Jacobs and Diane Bartz

ATLANTA/WASHINGTON (Reuters) - Consumer advocates worry the decision to green-light another big airline merger will mean higher prices before long, even though upstart airlines will get more access to busy airports near Washington D.C. and New York as part of the deal.

In the short term, the industry is waiting for the sale of takeoff and landing slots by the merging US Airways Group Inc LCC.N and AMR Corp's AAMRQ.PK American Airlines, a process that will take several months and be overseen by the Department of Justice.

The largest airlines are expected to be barred from bidding, leaving the field open to upstarts such as JetBlue, Allegiant and Spirit, if they chose to participate.

Despite this, fliers will ultimately face higher airfares after the industry shrinks to just three major carriers, said Rick Seaney, chief executive of FareCompare.com, which tracks airfares.

"In the past decade, we've seen the industry transformed from one that boasted eight large airlines to a mere four. With the latest merger, it drops to three," Seaney said. "It is likely we'll be sitting around in 2020 saying, 'I wish we still had eight carriers.'"

Industry experts were uncertain how much airfares might ultimately rise on different routes as a result of the merger.

However, Delta's merger with Northwest Airlines in 2008 led to price increases of more than 10 percent on four of the routes they dominated, as well as service cuts on another route, according to research by the American Antitrust Institute.

Based on the details on a settlement announced on Tuesday, antitrust experts said the consumers who could benefit would be those who use New York's LaGuardia, Reagan National outside Washington D.C. and other major airports.   Continued...

 
A U.S. Airways jet departs Washington's Reagan National Airport next to American Airlines jets outside Washington, in this February 25, 2013 file photo. REUTERS/Larry Downing/Files