US Air's Takeover of Delta Could Mean Higher Fares and Less Service for Travelers
Nov. 21, 2006. The US Airways $8.7 hostile takeover bid for Delta may not be good news for either vacation or business travelers. It will certainly mean less competition for many small cites in the Eastern US, especially in the Southeast, where the combined US Air/ Delta Airline would have over 70 % of the business in an airport.
Less competition will result in higher prices and less service, as many small cities have already experienced. An article in the Nov. 16 edition of the Wall Street Journal (subscription only) notes that there is significant overlap of routes such as the shuttles that both carriers now operate in the Northeast. It would also overlap in the South, with Delta's main hub situated in Atlanta and US Airways having significant operations in Charlotte.
The article quotes Michael Boyd, president of Boyd Group Inc., an aviation-industry advisory group, as saying of the merger that, “it would destroy competition in the deep South."
Boyd points out that while no airline currently commands more than a 39% market share in Charleston, S.C., a merged US Airways-Delta would gain more than a 70% share of that market, Mr. Boyd says. The new airline would have more than 75% of flights serving Montgomery, Ala., and nearly 80% of the market in Charlottesville, Va. "This is going to really hurt the consumer," he says.
The good news for consumers is the proposed merger may face tough scrutiny in Congress. The incoming Democratic chairman of the House Transportation Committee, Rep. Jim Oberstar of Minnesota, has stated that he would urge the Justice Department to conduct an antitrust review if the proposal moves forward. He is likely to hold hearings on the impact of the consolidation on airfares and service to small communities.
Congressman Oberstar has said, “A combination of carriers of this magnitude should be scrutinized in the public domain. Mergers reduce opportunity for competition and thereby increase costs to travelers." Although Congress has no formal role in approving proposed mergers, lawmakers can apply pressure on federal agencies.
This means that you as an individual traveler can have a voice on whether the proposed merger is approved. You can call or email your two Senators and your member of the House of Representatives and express your views.
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