This is not surprising. A United-US Airways merger would give this combination 27.4 percent of the passenger traffic among US airlines. Faced with such market dominance, the remaining carriers are likely to seek their own mergers just to stay competitive. If left unchecked, this could result in three major airlines, controlling over 85 percent of the nation s air travel. Foreign air carriers, such as British Airways and KLM, faced with competition from the American behemoths, will also be forced to grow in order to compete in international markets.
Merger mania goes global.
Two years ago, we had the opportunity to preview airline consolidation when the General Accounting Office examined the impact of proposals by the six largest US carriers to form three alliances. The GAO found that if all of the proposed alliances were implemented, competition could be reduced for about 100 million passengers each year. In response Congress gave the DOT authority to review various aspects including frequent flyer programs and code-sharing arrangements before an alliance could be implemented. By this action, Congress clearly expressed its interest in ensuring that competition in the airline industry remains intact. Immediately following the United-US Airways merger announcement, I called upon the Secretary of Transportation and the Assistant Attorney General to examine the merger vigorously, to look beyond the merger itself, and consider the domino effect it will set into motion as other airlines seek to merge in order to compete.