LOS ANGELES – After approving a number of airlines mergers over the past several years, the US Department of Justice (“DOJ”) has recently challenged the proposed merger between US Airways and American Airlines.
DOJ has concluded that the proposed merger “would eliminate competition between US Airways and American and put consumers at risk of higher prices and reduced service.” US Airways and American Airlines do not agree with DOJ’s assessment of the competitive effects of the merger.
The trial to hear DOJ’s challenge of the merger is scheduled to start two months from today, on November 25, 2013.
In order to determine possible benefits of the proposed merger to consumers, EconRA Principal Economist Sourav Chatterjee examines a number of economic indicia as well as behavioral responses of the market participants in the US airlines industry. The economic indicia examined include shares and concentration, passenger fares, ancillary fees, and capacity. The study also examines competitive responses of the airlines following imposition of new fees by another airline and their incentives for undercutting each others’ prices.
The study concludes that there still are a number of questions regarding how the proposed merger is going to benefit consumers.
Sourav Chatterjee, Principal Economist
+1 (424) 229-2630
EconRA is an economic research and analytics firm that specializes in studying economic institutions and incentives. EconRA generates critical insights based on thorough and unbiased analyses of data and behavioral responses of the market participants.