Saturday, January 25, 2014

It's happening . . .

US Airways bought American Airlines in a 363(b) sale conducted by the bankruptcy court.  Many, myself included, opined widely and loudly that this was a bridge too far in airline consolidation.  Evidence disseminated by AAI demonstrates the unsurprising result that past airline mergers have been followed by price increases and capacity reductions (a necessary corollary of the increases).  My own experience from the Delta-Northwest merger was that Northwest flights from IND-DCA, my commuting route, ceased, and the competitive $187 round-trip fare on which I used to count increased dramatically.

But then industry maverick US Airways, while charging me $300 at the minimum for my flights, took the salutary step of putting first class cabins in all of its regional jets except for the very smallest.  The Embraer 170s that populated the IND-DCA route all had cabin upgrade capability.  Now that my weekly flying was limited to US Airways, I amassed enough cred. with the airline to be upgraded on perhaps 90% of my flights.  It may seem like a luxury, but after 8 1/2 years of commuting for work it has become something of a necessity.

I've been waiting for the other shoe to drop.  After buying American, US Airways (now American) surely would have more profitable routes for its nicely accoutered aircraft.  DFW-LAX?  ORD-LGA?  And sure enough, for the first time in years, my pre-flight e-mail tells me "no upgrades available on this flight", which is not the same as the "you didn't make the cut" e-mail.  It means instead planes with no first-class cabin will be serving my route.

$300 for the pleasure of an annoying trip without the pre-take-off coffee and human-sized seating is a tad rich.  If the price drops closer to the competitive level, I'll deal with cattle car service -- but I'm not holding my breath.


  1. OMG!!! A post about my two favorite things -- bankruptcy law and antitrust law!! And also about my least favorite thing, being a law professor who has to fly half way across country to teach. I love this blog!

    FWIW, I had a similar experience during the years when I commuted from Columbus to Saint Louis and from Columbus to NYC. On the Saint Louis route, TWA was commuting with Southwest and I could basically walk up to the gate and get a first class one way ticket for $89. On the NYC route, USAirways and America West were both running mini-hubs out of Columbus, so there were lots of flights and the price was reasonable. Checking the Columbus route today on Travelocity, it's still a pretty competitive route (United, Delta and American all run non-stops), but my usual routing would be up around $400. Ouch!! The Saint Louis route, reflects a similar price increase, but non-stop service is now non-existent.

    I think this raises a larger topic of conversation -- the proper shape of airline regulation.

  2. TWA was "competing" with Southwest.

  3. Its why I have used pending airline mergers as my simulation in antitrust law two of he past three years (plus ATT- TMobile). Easy industries to understand why competition matters.

  4. Also to discuss predation, recoupment and cross-subsidization. . .

  5. I would love to see notes from those simulations if you are willing to share them.