GAO cautious on airline merger

A government review finds that the merger of American Airlines and US Airways would reduce competition on more than 1,600 routes traveled by more than 53 million passengers — a deal that a local official has said won’t hurt service at airports in Baton Rouge and New Orleans.

Nationally, the loss of competition would be greater than occurred with the 2010 merger of United Airlines and Continental Airlines, an analyst for the Government Accountability Office told a U.S. Senate panel on Wednesday.

Antitrust regulators at the Justice Department are reviewing the proposed American-US Airways deal, which also faces a vote by US Airways shareholders and would need approval by the federal judge overseeing American’s bankruptcy case.

American and US Airways executives have defended their merger by noting that they overlap on only 12 nonstop routes.

But the GAO also considered connecting routes — those with at least one stop. GAO analyst Gerald Dillingham told a Senate aviation subcommittee that if the merger is approved, competition would decline because there would be one less airline flying those connecting routes.

There is at least one other airline on most of those 1,665 routes, Dillingham said, including low-cost airlines on 473 of them.

There’s not a lot of overlap between US Airways and American Airline’s flights at either Metro Airport or Louis Armstrong New Orleans International Airport, Jim Caldwell, Metro Airport’s manager of air service development, marketing and public relations, said when the merger was announced in February.

The combination could make the merged company more competitive, Caldwell said. At Metro Airport, Delta has the largest share of traffic, with United Airlines a close second. American is third and US Airways is a distant fourth. Combining US Airways’ and American’s market share gives three carriers nearly equivalent shares.

US Airways Group Inc. CEO Doug Parker, who will lead the combined company if the merger is approved, told the Senate panel that the deal would be good for consumers by creating a bigger airline with service to more locations than either American or US Airways can offer on their own. It would be the world’s biggest airline.

“A broader airline network is better for passengers because it gives them more choices, a wider variety of services, and more competition on more routes,” Parker said. He said it would create a more powerful competitor for United and Delta, which are bigger than No. 3 American or No. 5 US Airways.

Sen. Jay Rockefeller, D-W.Va., chairman of the Senate transportation committee, said in a statement that Congress “must make sure that the advantages of a strong aviation sector benefit more than just shareholders.”

Congress has no role in approving or rejecting the merger, although lawmakers can try to influence the Justice Department’s decision. At Wednesday’s hearing, much of the discussion revolved around the fate of Reagan National Airport near Washington, where the combined American and US Airways would operate about two-thirds of the flights although carrying only half the passengers.

The Justice Department could require the merged company to give up some takeoff and landing slots at National, but Parker warned that could prompt the new American to reduce flights between Washington and smaller cities. JetBlue Airways, Southwest Airlines and others could be interested in gaining slots at the airport.