US Airways and American Airline Merger

      Mergers within the airline industry have been happening for years but the most recent proposed merger between US Airways and American Airlines has caused some concern. There is debate over whether the merger will be good for the consumer or not, will it raise prices or lower prices? According to the Huffington Post the merger will lower competition on more than 1600 routes, while the airlines insist that the two companies only have 12 overlapping routes, others are taking into consideration the connecting routes. While there may not be many overlapping flights they will be adding those connecting routes to their schedules which reduces the competition on those routes also. Doug Parker, the CEO, of US Airways Group Inc. says that the merger will be good for consumers because of the new and extended options that will be available to them because of the added routes between each company. The merger would create the worlds largest airline, and taking into consideration Parkers view of reducing competition and creating more options for passengers I would believe that ticket prices would go down, I believe it would be unwise to present the merger as a benefit to passengers and then raise prices on them when prices are the most important thing considered when people travel by air.

Another issue that has raised concern for the merger is speculation over how the seniority list will be merged. According to David Jones, a consulting editor for FAPA, in the past the seniority list has been decided several ways, not all of them deemed fair, for example the list has been made depending on the size of the two merging companies, often the smaller companies employees, regardless of their time, were just added to the bottom of the larger companies seniority list. Another way the list has been made was according to age, regardless of hire date or experience, this happened in the 80's and when the company furloughed employees, pilots with higher level of experience were laid off because of their age while older pilots with less experience were still working. For those outside of the industry it might be difficult to understand the deep impact of this, but seniority for a pilot determines the aircraft they fly, what seat they're in and even what routes are available to them. With two major companies merging, it will be very difficult to determine the list in a way that pleases everyone. If it were up to me to determine how the seniority list was compiled, I believe that the fairest way would be to start at the top with years of employment with their company, followed by date of hire, and then the final positions would be determined by the last four digits of the employees social security number. I believe that this would be the fairest way in that experience is still being considered and the random slots assigned by SSN will be isolated to the few competing employees on a certain hire date.

While all of these topics are important to the merging of these two companies, none of it will matter if the merger is not approved by the Department of Justice. All airline mergers must be reviewed by the DoJ according to the nation's antitrust laws, antitrust laws, according to the DoJ website “protect economic freedom and opportunity by promoting free and fair competition in the marketplace.” (2013, DoJ) The reason why this particular merger has been hung up is because there are a few who believe that the merger will cause the new company to have an unfair advantage over other companies. Now this sound like a serious problem and when I first read this I wondered what huge thing this new company would have that created such a large advantage, but according to Reuters the advantage is the number of take-off slots that will be held by the company at Reagan National and a few other airports. Because the new company will hold the slots owned by US Airways and American Airlines, the company has been asked to give up a percent of those slots, while they agree to give up some, they have said that they would only be willing to give up so many. In my opinion, however, I don't foresee them not giving up the slots that gets them the approval from the DoJ.

There is a lot of controversy surrounding a larger merger like this, and it is easy to speculate what will happen, but honestly the most we can do is sit back and see what happens.

Bartz, D. (2013, November 4). Justice department details deal for american, us airways fight. Retrieved from http://www.reuters.com/article/2013/11/04/us-americanairlines-usairways-antitrust-idUSBRE9A30QS20131104

Department of Justice. (n.d.). Mission. Retrieved from http://www.justice.gov/atr/about/mission.html

Jones, D. (2013). Pilot seniority a hot issue at merging airlines. Retrieved from http://fapa.aero/content.asp?ID=69&Gateway=Industry

Koeing, D. (n.d.). American airlines-u.s. airways merger would reduce competition: Gao. Retrieved from http://www.huffingtonpost.com/2013/06/20/airline-merger-competition-gao_n_3471090.html