Yeager director says merger wouldn't hurt passengers
CHARLESTON, W.Va. -- The director of Charleston's Yeager Airport said Tuesday he still believes a proposed merger between American Airlines and US Airways would not hurt local passengers, even though the U.S. Department of Justice mentioned Charleston flights that could be negatively affected in a lawsuit seeking to block the merger.
"The Justice Department approved three previous mergers, between Delta and Northwest, between United and Continental, and between Southwest Airlines and AirTran Airways," Yeager Director Rick Atkinson said on Tuesday.
"I would rather not have seen those airlines combined. But since the Justice Department approved those, it is kind of late to talk about the market power of merged airlines, when you already let three other airlines buy their competitors," Atkinson said.
The Department of Justice, along with attorneys general from six states and Washington, D.C., argued the proposed $11 billion merger, announced in February, would reduce competition in "commercial air travel in local markets throughout the United States and result in passengers paying higher airfares and receiving less service."
As part of the lawsuit, the Department of Justice argues that the American-US Airways merger would increase "market concentration," which the lawsuit calls "one useful indicator of the level of competitive vigor in a market, and the likely competitive effects of a merger. The more concentrated a market, and the more a transaction would increase concentration in a market, the more likely it is that a transaction would result in a meaningful reduction in competition."
Airline market concentration is measured by the Herfindahl-Hirschman Index, or HHI, according to the lawsuit. Markets with an HHI higher than 2,500 are considered highly concentrated.
According to the lawsuit, the HHI for a flight between Charleston and New York City is 3034. After the merger, it would be 6407. Charleston no longer has a direct flight to New York; the flight, offered by American, was dropped June 12.
That same day, American started a direct flight to Dallas. According to the lawsuit, the flight from Charleston to Dallas has an HHI of 212, and it would increase to 4244 after the merger.
American Airlines escaped from bankruptcy after merging with US Airways. If that merger remains in effect, it will create the nation's biggest airline, putting it ahead of United Airlines and Delta Air Lines.
The Department of Justice noted in its lawsuit that there were nine major airlines in 2005. If this merger goes through, there would be four: United, Delta, Southwest and the merged American-US Airways. Those airlines would account for more than 80 percent of the passenger service market in the United States.
Kanawha County Commission President Kent Carper said, "We generally think [the new merger] is good, despite the fact it will generally mean higher ticket prices.
"Beside that, this is the way it is," Carper said. "The idea that you have less air carriers is not a good thing. But the world we grew up in -- with our grandfather's Oldsmobile and Mom-and-Pop grocery stores - is not here any more. The merger will be OK."
Atkinson said the new merger could also "have a positive impact, because it would give US Airways more reach. ... Our analysis is that it will improve our competitiveness.
"When Southwest and AirTran merged, it had a negative impact on Charleston. We lost service to Orlando, Fla. I didn't see the Justice Department looking at that one," Atkinson said. "They have already gone down the road of letting airlines merge. With the toothpaste out of the tube, it is sort of hard to put it back in."
Reach Paul J. Nyden at email@example.com or 304-348-5164.