Title

Testimony before the House Judiciary Committee, Competition and Bankruptcy in the Airline Industry: The Proposed Merger of American Airlines and US Airways

Document Type

Presentation

Publication Date

2-26-2013

Conference or Event Name

Congressional Testimony

Place

House Committee on the Judiciary, Subcommittee on Regulatory Reform, Commercial and Antitrust Law

Abstract

Airline and business group representatives and antitrust analysts testified about the impact on competition and consumers of the proposed merger between American Airlines and U.S. Airways.

"I'm going to talk instead about what I also think is relatively simple, and that is the competitive effects. There isn't time for me really to address it fully, but I will say this. In the written statements that I read last night -- and I read them all -- the most remarkable statement was that, in this merger, among the thousands and thousands of daily flights to cities all across the United States that are controlled by these two carriers, the only overlaps that matter in the whole combined network will be 12 overlaps, 12 flights.

We could delve into some complexities. I'd rather focus on what seems to me simple. We should ask ourselves, among those thousands and thousands of flights, are there really only 12 cities in which these two carriers provide competition with each other that will be lost through this merger? I don't think so.

For a brief introductory analysis to what are the more likely effects, you can look at the white paper produced by the American Antitrust Institute, which is attached to Mr. Mitchell's written statement.

The final thing I'll say -- and, unfortunately, I have a very brief remaining time to say it -- is that a dominating theme of all discussion of airline mergers since deregulation has been the economic difficulties of the carriers. The claim is we have to merge, we have to consolidate to strengthen ourselves so that we can perform.

Here are a few thoughts about that. First of all, the carriers really have never offered any very plausible explanation why merger. It has to be merger that's going to solve our economic problems. They can, and they often have suggested a lot of detailed arguments. But again, I think the response is a relatively simple one, and that is that, well, we've had a long time.

We've had 35 years with dozens of mergers, every single one of which has been sold on the claim that synergies, cost savings, et cetera, are going to make us competitive. It hasn't worked. The airlines have remained -- the latest airlines, at least, have remained mostly economically in dire straits throughout that whole time."

Comments

Link is to Professor Sagers' testimony on C-SPAN. Professor Sagers' testimony begins at 43:40