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What you need to know for 01/24/2018

Travelers may save, but can airlines survive?

Travelers may save, but can airlines survive?

Mergers not the answer for consumers, might be for carriers

On the face of it, the federal government’s antitrust suit against the latest legacy airline merger plan — American with USAirways — wouldn’t seem to have much impact on Capital Region travelers. That’s because American pulled out of Albany five years ago, is in bankruptcy, and isn’t expected to re-enter the market even if the merger goes through.

But rejection of the merger would be good for fliers everywhere if it forced the carriers — not just American and USAirways, which continues to serve Albany International Airport, but the industry’s other major players as well — to sharpen their pencils and become more competitive instead of a fat, happy oligopoly.

Fares, as well as fees for services the airlines used to give away, have risen steadily everywhere in recent years, as the government has approved one large merger after another. And an American-USAirways merger would put 80 percent of the domestic market in the hands of just four carriers.

The Justice Department suit notes that competition would be especially limited at Washington’s Reagan National Airport, where a combined American-USAirways would control 69 percent of the takeoff and landing slots. In fact, that airport is a popular USAirways hub for Albany passengers bound for other destinations, so some could definitely be affected by monopolistic pricing there.

Indeed, the suit cautions that USAirways, which tends to operate in smaller airports (like Albany’s), would be less inclined to offer low fares from those cities if a merger went through; and USAirways’ lower fares have apparently helped restrain those of its competitors.

The big question with the government’s strategy, which it says will spare consumers hundreds of millions of dollars a year in higher fares and fees, is whether either airline can survive independently. Maybe they will, now that bankruptcies have enabled both to get out from under onerous labor contracts. But both are still pretty fragile, and a spike in oil prices or a slumping economy might send them into a fatal tailspin, which would be bad for airports like Albany’s.

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