Saturday, August 24, 2013

My take on AA/US Air Merger Litigation

I will be appearing on the Bloomberg law podcast discussing everyone's favorite aviation merger case.  It airs on Bloomberg Radio sometime on Saturday and then eventually eventually gets posted at 

I am more sanguine about the government's case than Max, but not sure what exactly will be aired on the program since I did a twenty minute interview that gets chopped down to 6-7 minutes.  We can discuss once I hear what they use. 

My bottom line is that the complaint (if the facts prove as alleged)  is consistent with the 2010 merger guidelines but somewhat more aggressive than past practice.  I don't think its inconsistent to say that, in light of past mergers that weren't challenged or settled, that this merger raises unilateral and coordinated effects issues that cannot be fixed.  There is no theoretical reason that discounted connecting fares cannot compete with non-stop flights for certain segments of air travelers, that is just a fact issue that I am sure the airlines will vigorously contest.  I am pretty sure the merger is a terrible idea for air travel in and out of National Airport.

This actually reminds me of some of the steel mergers in the 1980s where whomever went first got cleared but later mergers got challenged as concentration rose.  There was even an instance where one merger was announced and while that was pending a second merger in the industry was announced drawing a challenge to both, where neither probably would have challenged by itself.

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