Edward Hasbrouck, "The Practical Nomad"

Airline mega-mergers will lead to higher fares, fewer direct flights, less choice, and worse service for travellers. And the damage will continue long into the future, since these mergers will make it even harder for new airlines to get started.

Airlines want to merge because they think they will make more money that way. Larger airlines don’t have lower costs — some smaller airlines have much lower costs. Mergers will lead to higher airline profits only if mega- airlines are able to charge higher fares, or restructure their routes to reduce the number of flights.

Both of these are bad for passengers. Merged airlines will likely operate fewer flights, and “consolidate” services. It’s cheaper to operate fewer, larger planes between a smaller number of hubs. But that means fewer direct flights, more people changing planes, and flight delays and overcrowded terminals when more, larger planes converge on mega-hubs.

Mega-mergers will mean more airports monopolized by one or two airlines. Airlines have a proven propensity to raise prices wherever lack of competition — and lack of enforcement of Federal antitrust law — makes it possible. Since airlines were deregulated, they have raised prices both at their “fortress hubs” and at small airports that are “spokes” on the route system of only one or two airlines.

Airlines claim that bigger airlines will offer passengers conveniences like single-airline ticketing and baggage checking to more places. But airlines have had systems in place for decades that permit through fares, ticketing, and baggage checking between airlines. What travellers care about is price and quality of service, and neither will be improved by mega- mergers. Airlines are exempt from almost all state and local fraud, truth-in-advertising, and consumer protection laws. Airlines have abused that exemption to the max, with deceptive practices like “code sharing” and ads for “half roundtrip” fares that no other businesses could get away with.

Despite airlines’ hypocritical prattle about “open skies” and the need for “global competitiveness”, airlines benefit from the most extreme protectionism of any industry in the USA. Domestic US air routes are closed completely to foreign airlines, and foreign ownership of US airlines is forbidden.

The public would best be served by measures to open the American skies to global competition; repeal Federal “preemption” of airline regulation; step up enforcement of existing Federal airline laws; ban code sharing as fraudulent; and reintroduce regulation of routes and fares in those markets without real competition.

"Don't believe anything just because you read it on the Internet. Anyone can say anything on the Internet, and they do. The Internet is the most effective medium in history for the rapid global propagation of rumor, myth, and false information." (From The Practical Nomad Guide to the Online Travel Marketplace, 2001)

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Will airline mega-mergers be good for travellers?

by Edward Hasbrouck, author of “The Practical Nomad”