Thursday, Jan. 11, 2001 | 9:21 a.m.
Merger mania certainly hasn't abated in the airline industry -- and consumers should be worried. American Airlines wants to buy the financially ailing Trans World Airlines and may even acquire part of US Airways. And United Airlines is still waiting for federal approval for its $4.3 billion bid on the rest of US Airways. If both American Airlines and United Airlines receive the green light for these transactions, then these two airlines combined will account for nearly half of the domestic flights in the United States.
Such an intense concentration of market share by just two companies spells trouble. Fewer airlines means less choices. The lack of competition, in turn, means that airlines have less incentive to keep fares low. Shareholders and company executives may do well under these mergers, but service also is likely to suffer, with fewer routes offered, which likely will result in more delays. Meanwhile, there will be increased pressure on the smaller airlines remaining to merge in order to compete against the newly formed behemoths, which could result in just a few major airlines operating nationwide.
As the New York Times noted recently, some advisers to George W. Bush have contended that the Clinton administration has been too tough when deciding whether to approve acquisitions, often requiring concessions from the merging companies to ensure that competition wouldn't be harmed. It is hoped, though, that the incoming president will maintain the same healthy skepticism about the value of such mergers as has the departing administration.
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