Critics of the proposed American Airlines/U.S. Airways merger fear the deal will hurt competition and lead to higher fares. Airline representatives say those fears are unfounded. The two sides faced off during a U.S. House subcommittee meeting on Tuesday.
Passenger advocate Kevin Mitchell warned that the combined carrier would not just cut competition, it might also limit publication of fares. He said it happened before, when American Airlines would only publish online fares on Orbitz. He said U.S. Airways thwarted the move at the time by not going along. But he says if American now swallows U.S. Airways, it’ll succeed, and others will follow.
“The problem is no publicly available fares and schedules will be available anymore. It kills transparency. I’ll get a deal crafted for me with nowhere to go to compare it publicly to see if I really got a good deal at all.”
But Clifford Winston wasn’t buying the argument. Considered an expert on airline pricing, he’s with the Brookings Institution.
“It is absolutely ludicrous to think that an airline will think ‘Hey, it’s a good strategy for us is to not have transparent prices for people who fly all the time,’ who probably have these things memorized and all of a sudden one day they don’t know what they are. I’m mean, talk about a way of alienating customers.”
Members of Congress also worried that workers would pay a price in both lower salaries and lost benefits if this deal goes through. American Airlines Senior Vice President Gary Kennedy said the airline worked hard with union members on a contract they're all satisfied with.
“When we structured our new contracts with our organization labor groups we did so in a way that would provide to the company productivity improvements but would also provide pay increase for employees. We now have new six-year contracts.”
Representatives also worried about losing flights in some of the carriers’ hub cities they represent. But U.S. Airways Vice President Stephen Johnson tried to calm those concerns.
“We’re very happy with the hubs we have. They’re geographically diverse, they’re functionally diverse. They all work for the separate airlines. So we anticipate they’ll be very successful after the merger. We don’t anticipate adding any hubs.”
Congressional approval is not required for this merger’s approval, but a Justice Department ok is. Observers expect it will be approved.