The American Airlines-US Airways Merger in an Evolving Airline Industry

The American Airlines-US Airways Merger in an Evolving Airline Industry

A Brookings blog post looking at the competitive effects of the consolidation of the US Airline industry. It is an interesting look at explaining why despite decreasing number of competitors in the US air travel market that prices haven’t increased as much as some worried. I don’t disagree with the overall point that Winston makes. However, I think he may have under estimated the increase of airfares by not taking into account the new pricing schemes that most airlines are using, where they charge additional fees for services that were once included in the ticket price (checked bags, food and beverage, etc.). There is also no mention about the increase in fuel costs, which is one of the major drivers of airline cost. So, while I think that it is true that airline mergers have led to operating efficiencies of which some of the cost savings have been passed along to consumers, without an analysis on a changing pricing mechanism, changing definition of services provided, and a look at fuel costs it is difficult to untangle what the real change in airfare is and how much of it may be attributable to the airline industry’s consolidation.