BTC calls for investigation into airline M&A

Victoria
By Victoria April 23, 2012 16:34

BTC calls for investigation into airline M&A

The Business Travel Coalition (BTC) has asked the US Department of Transportation (DOT) to study the consequences of recent airline mergers in light of US Airways’ (US) public announcement that it is pursuing a merger with American Airlines (AA).
The BTC says: “A rational case can be made that such a merger would lead to higher prices, less mid-size community service and more onerous consumer-facing airline policies. An equally coherent argument is made by some experts that disallowing the merger – after approvals of the new Delta and United – would eventually lead to US and AA being squeezed out of the market ominously leaving the U.S. with a national network-carrier duopoly.”

The release continues: “Another pernicious effect of airline industry concentration is the ability of airlines to ignore the demands of their most valuable customers. 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,” stated BTC Chairman Kevin Mitchell.

“The ability of suppliers to ignore their very best customers’ needs points decidedly to a failed market. As such, a critical determination is how much more consolidation is workable with respect to an objective of restoring and maintaining a functioning competition in the marketplace for commercial air transportation services,” added Mitchell.

BTC believes that 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 accomplished well in advance of Congressional hearings on a proposed US-AA merger.

For its part, BTC says that it will immediately initiate due diligence with airlines, labor groups, analysts, corporate travel managers, travel management company executives and consumer groups with respect to this proposed US-AA merger. BTC has 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 recognizes that the industry has changed, and that policy prescriptions of the past might not be appropriate today.

Victoria
By Victoria April 23, 2012 16:34
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