Concerns raised over AA - US Airways merger

Concerns raised over AA - US Airways merger

Serious doubts have been voiced over the potential impact of the likely $11 billion merger between American Airlines and US Airways to create the world’s largest carrier.

The US-based Business Travel Coalition argues there are few passenger benefits to outweigh the negative impact of the combined airline giant.

These include reduced competition, higher fares and fees and diminished service to small and mid-size communities in the US, according to the BTC.

The Coalition said: “To be clear, there is benefit in a financially viable air transportation system.

“However, previous mergers have already enabled seat capacity cuts, higher fares and billions of dollars in fees for ancillary services resulting in a financially strengthening industry.

“As such, consumer harms from this merger are indeed exacerbated, as there are no substantial countervailing consumer benefits.”

The Coalition expects details of the merger to emerge by Friday, the deadline set for non-disclosure agreements to expire between the two airline groups.

It said: “A combined American Airlines and US Airways would have a bigger competitive footprint to compete with Delta and United Continental, but that’s the logic that has brought us to four network carriers, and if you continue to extend the logic the US would be down to two closed network-carrier systems pretty soon, after one of these mammoth groupings acquires Alaska Airlines, JetBlue Airways and Frontier Airlines.

“What’s more, US Airways and American Airlines are not failing firms. The former is enjoying record profits while that latter is about to exit bankruptcy reorganisation with billions of dollars in cash, lower operating costs and new aircraft on order.”

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