BTC Questions Proposed US Airways, American Airlines Merger

The Business Travel Coalition (BTC)  urged the U.S. Department of Transportation (DOT) to study the consequences of recent airline mergers in light of US Airways' (US) announcement last week that it is aggressively pursuing a combination with American Airlines (AA).

BTC said the DOT study should consider the rapidly changing commercial air services marketplace and heed input from the travel industry.

There is no disputing that consumers, corporations and the country as a whole require a financially viable air transportation system, BTC said."Airlines are the one unique industry that virtually all other industries depend upon to service their own customers and grow their businesses and industries. There is also little doubt that recent consolidation has enabled most airlines to navigate through a volatile jet-fuel pricing environment and somewhat repair balance sheets. "

Another pernicious effect of airline industry concentration is the ability of airlines to ignore the demands of their most valuable customers, BTC says. "For example, since 2008, when U.S. airlines began to aggressively unbundle their product and offer ancillary services, despite corporate buyers' substantial purchasing power and calls for ancillary fee transparency, airlines have refused to provide this fee information in a salable format to the marketplace."

BTC Chairman Kevin Mitchell said a critical determination is how much more consolidation is workable without loss of competition in the marketplace.

BTC said it believes DOT should undertake a thorough assessment of the promises, economic analyses and statements provided to the U.S. Congress, Department of Justice (DOJ) and State Attorneys General from recent airline-merger participants and compare what was presented with what the actual outcomes have been.

The study should be done well in advance of Congressional hearings on a proposed US-AA merger, BTC said, and assist all travel industry stakeholders to understanding the risks and  rewards of consolidation.

BTC said it will immediately initiate due diligence with airlines, labor groups, analysts, corporate travel managers, travel management company executives and consumer groups with respect to the proposed US-AA merger.

BTC noted it had testified in Congress and has generally opposed domestic U.S. airline industry consolidation - including the 2000 US Airways/United Airlines, 2006 US Airways/Delta and 2008 Delta/Northwest Airlines proposed mergers. Two of three
of those merger attempts were blocked, BTC said.