Mergers lead to increased fees for fliers

As mergers become more common, airline fares are up

As the debate rages on over whether US Airways and American Airlines should merge, one of the biggest points of contention is that such a partnership would lead to an increase in fees for travelers. Critics seem to have a point, because recent analysis revealed that the mergers that have already taken place have caused a spike in fares, The Associated Press reported.

In the last 10 years, a number of airlines have joined forces. For instance, in 2005 there were nine major airlines in the U.S., and now there are only five. Should the US Airways and American Airlines partnership be approved, that number would shrink even further. In 2012, the average cost of a round-trip domestic ticket stood at $378.62, which was up more than $26 compared to 2008. Although consolidation has helped stabilize the industry, it means that travelers will likely have to pay more. 

"It's too late. It's already a very consolidated industry," said Savanthi Syth, an airline analyst with Raymond James, told the AP. "I don't know if you want to stop an industry from being profitable."

Despite the stability consolidation offers, consumer advocates say such moves are bad for fliers. As a result, the Department of Justice recently took action to block the merger of US Airways and American Airlines, which would create the world's largest carrier. Officials from the DOJ said that the merger would eliminate competition on highly traveled routes such as Charlotte to Dallas. The loss of any viable competitor would cost consumers about $3 million per year, Bill Baer, assistant attorney general for the antitrust division, told USA Today.

Leave a Reply

Your email address will not be published. Required fields are marked *