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Is it time to unmerge some airlines?

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November 19, 2013

Is it time to unmerge some airlines?

The Justice Department’s settlement agreement with American Airlines and US Airways, which will finally allow the carriers to merge, is taking the airline industry in the wrong direction, say many travelers.

The government, you’ll recall, sued to stop the latest mega-airline from being created this summer, citing competitive concerns. It only green-lit the deal after the airlines promised to surrender gates and landing permissions at several busy airports.

But it’s not what some passengers wanted. Instead, they hoped regulators would go the other way, blocking a wrongheaded merger and maybe undoing a few previous mergers, too.

That’s right, they want to?unmerge?a few airlines.

“I miss Continental Airlines,” says Carole Talan, a retired college professor from Gardnerville, Nev. “The attendants were friendly, accommodating, helpful and fun ? and they seemed to enjoy their jobs. Frequent-flier benefits were generous and easy to redeem.”

All that changed when it merged with United Airlines. The friendliness disappeared, and the easy rewards vanished, she says. Talan wishes the merger had never happened.

Can a merger be undone? Yes and no, says Daniel Sokol, who teaches a class on antitrust mergers at the University of Florida’s law school. While there’s a precedent for breaking up a merger after it’s consummated ? the most prominent being a 2007 case involving two hospitals in Cook County, Ill., whose combination allegedly resulted in higher costs to insurance purchasers and consumers ? the government has never tried to reverse an airline combination.

“You can’t unscramble an airline merger,” says Sokol. The new carriers are simply too integrated to pull apart.

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Source USA Today,

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