North Florida Already Feeling the Brunt of Anti-competitive American/US Airways Merger

AA new

Several months ago the US Department of Justice along with several state’s Attorney Generals (including Florida’s Pam Bondi) sued to stop the merger of American Airlines with US Airways. The two carries combined will create one of the world’s largest airlines and since US Airways maintains the lowest fares of any network carrier in the country, the merger was always likely to raise fares. I also argued at the time that we would see cuts to smaller cities in the merger as American has maintained for many years what they call a “cornerstone” strategy based around the major aviation markets in the country save Atlanta (Boston, New York, Miami, Chicago, Dallas/Fort Worth and Los Angeles).  American has very few flights that do not touch airports in the aforementioned markets. US Airways has long been the largest carrier at Philadelphia International and Washington’s Reagan National Airport. Combined this behemoth may sacrifice critical service to smaller cities.

Unfortunately the Justice Department backed down simply forcing the new American to relinquish slots at Washington’s National Airport in the name of “competitiveness”. Of the 17 routes being trimmed thanks to DOJ’s intervention, three are to North Florida cities – Tallahassee, Fort Walton Beach and Pensacola, making each of these town’s links to the capital seasonal at best. Rumors on airline message boards indicate that the new American may have cut more slots than required in Washington to counter the increase in service by low-cost carrier JetBlue from National to their Florida bases in Orlando and Fort Lauderdale. JetBlue is building a large international gateway operation in Fort Lauderdale that threatens American’s massive international connecting hub in Miami. JetBlue and American signed a partnership agreement a few years ago but the New York-based low-cost carrier’s explosive growth in Fort Lauderdale has cooled relations as has JetBlue’s apparent unwillingness to abide by originally planned cuts at New York’s JFK Airport. The rumors state that some of the slots saved by these cuts are not being returned to the DOJ but in fact will be used to increase American’s service from Washington to the two southeast Florida airports and Orlando.  (The irony of this is that JetBlue did not serve National at all a few years ago and in a deal with American acquired slots  specifically to begin service to Fort Lauderdale and Orlando which had been previously linked on the airline from Washington’s far flung Dulles Airport. That was a different time though, when American was scaling back DC operations and allegedly colluding with JetBlue in NYC where both saw Delta as a major threat.)


1 FREE Audiobook RISK-FREE from Audible

Smaller cities were always going to be hurt by this merger. The airlines keeping fares competitive like JetBlue, Virgin America, Allegiant and Spirit do not serve Florida’s smaller communities. They all serve Orlando and Fort Lauderdale while three of the four Tampa and Fort Myers. None of these airlines serve Tallahassee, Fort Walton Beach or Pensacola. In the bigger picture North Florida has been hurt by this merger yet I have not heard a peep from the state about this. Allowing the Panhandle to become less accessible for consumers outside our state is an economic issue and while many Republicans (except Bondi who to her credit signed on to this lawsuit) feel corporate mergers are to be allowed with any sort of regulation, this is a clear example of an entire region potentially being hurt by something that very few thought about before allowing the companies to combine operations.

2 comments

  1. The problem Kartik is that the previous mega airline mergers were allowed to go through without much resistance from the Department of Justice. They were never going to win this lawsuit simply because it was the last big merger after every other bigger line had merged. Had the Bush era Department of Justice done their job then we wouldn’t be in this position

    Like

  2. […] January, following the merger’s approval by the Department of Justice (DOJ) we discussed the potential route cuts. Following up on that article we have dates now for the cuts by AA/US and can confirm that the […]

    Like

Leave a Reply to Tyler Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: