Photo of Eric Holder
If American Airlines and US Airways merge, it will be the fourth such merger of major airlines in recent history. The Department of Justice has already approved United/Continental, Delta/Northwest and Southwest and AirTran mergers, so why the hesitation to allow US Airways and American Airlines to do the same?
The high cost of doing business is making it impossible for corporate America to remain competitive. That is why these two airlines are looking to merge. I believe that in the future, we will continue to see more mergers and consolidations as the most cost-effective way for companies to stay in business and still be competitive.
According to the DOJ, their hesitation stems from the fact that if US Airways and American join forces, the number of major airlines would be reduced from five to four, leaving some to worry that such dominance would reduce competition and raise prices to the consumers. Will one less airline drive up the cost of airfares? Maybe. But I am wondering how they determined five as the “magic” cut off number.
Regardless of the number of major airlines to choose from, the truth-of-the-matter is if the airline ticket gets too expensive, people just won’t fly. Flying for most people is a luxury and not a necessity. If people can’t afford to fly, then they will stay home.
By way of example, during the current economic downturn a new trend, called the “Staycation, has evolved. When people cannot afford to take a “vacation” they just take a stay-at-home-vacation. And with gas prices at nearly $4.00 a gallon, I think that trend will continue to be a way-of-life for many consumers making it even more difficult for airlines to stay in business.
It makes sense that this is the motivating factor of these two airlines merging and keeping their prices competitive.
Instead of our Government being a hindrance to business, maybe they should try a new approach to this problem. Here’s a new concept they should consider, they should review the overall operating expense to run an airline and search for the areas where they could be helpful; not hurtful. Once they have determined what is driving up the cost to operate the airlines, then they should look for ways in which they could help to reduce the costs.
One thing that immediately comes to mind is the high fuel costs.
How could the government help with reducing the cost of fuel and in return lower the cost of airline tickets?
Well, for one thing, they could approve the Keystone XL Pipeline. Several months ago, this was a hot topic and proponents felt that this pipeline would not only create good paying jobs but it would result in cheaper gas prices. A win-win situation for all Americans. However, those in control of our Government were totally against it.
Excuse me if I find it hard to believe that “suddenly” the government is concerned about consumers over the price of airline tickets when they opposed the Keystone pipeline, which could have helped reduced our fuel costs on everything we purchase including airline tickets.
US Airways and American Airlines have both filed bankruptcy. Who can blame with them? The past five years of sky-high gas prices have played a major factor in causing these airlines to lose money.
If we can drive the cost of fuel down, then perhaps all these major airlines would not have to merge just to stay afloat.
Actions speak louder than words. If the government had gotten behind the Keystone pipeline then perhaps I just might believe that they really cared about the American Consumer.
For now, I think I’ll spend the money that I saved by not purchasing an airline ticket, to fill up my gas tank so I can get to work tomorrow.