Media Examines How Airline Merger Mania Will Affect Travelers
December 18, 2006. What started with news from U.S. Airways and Delta has spread like wildfire throughout the airline industry. Now, travelers are wondering how the mergers will affect their next trip to a vacation rental. Anticipating these concerns, the media has jumped on the topic this week.
An article in USA Today summed up the recent activity. Last month, U.S. Airways announced a bid to acquire Delta. This week, several more acquisitions came int o play. Reports surfaced on Tuesday of a possible combination of United and Continental. The next day, AirTran Holdings said it made a bid for Midwest Air Group. Even in Australia, private interests made unsuccessful bids on Qantas Airways.
CNN’s Money.com posted a story predicting “fewer choices, higher fares.� A quote from airline consultant Michael Boyd sums up critics’ fears:
“Any merger that takes out a brand takes out an option. Whenever a consumer has less options, you’re going to have higher fares. That’s all there is to it.�
A story in the New York Times, however, points out that traditional wisdom may not necessarily be true, depending on which mergers play and how. The article cites a study by a Brookings Institution economist who found that the exit of some inefficient airlines may allow low-fare carriers to step up and improve the industry.
