Two more opinions this morning about the Justice Department sued to block the American-US Airways merger. First, from Cranky Flier:
[I]f DOJ really wanted to settle for slots at National, it would have done so before filing such a strongly-worded, broad case. Now it has sort of pinned itself into a corner. If it settles, it sets precedent that can be used against it in the future. If it goes ahead with trial, it risks everything.
See, if it goes to trial, then the judge will review the case on its merits. And the end result will be binary. Either the DOJ’s complaint is validated (which still seems unlikely at this point, though we don’t know if DOJ has something more substantial hidden somewhere) or it’s shot down. And if it’s shot down, then the new American not only gets to merge, but it gets to keep all its slots at National and everywhere else. That’s quite a risk to take.
Clearly DOJ thinks that it can win this thing or it never would have taken a chance like this. But it’s a huge gamble. Now we just have to wait and see what happens.
The Economist's Gulliver Blog also weighs in about whether deregulation is to blame:
The consolidation of air service at central hub cities is bad news for cities that aren't hubs. But it's great news for the cities that are. It's good for airlines that are saving money by shutting down inefficient routes. If it's encouraging businesses and people to move to more densely populated areas, well, there are numerous economic and environmental benefits to having people live and work closer together. And the loss or decline of network carrier service to some small airports has fuelled the rise of ultra-low-cost carriers at some of those same airports. All of which is to say: the decline of small and medium-size airports is less of an unmitigated disaster and more of a mixed bag than Mr Longman and Ms Khan make it out to be. Returning to a more regulated airline industry would be a huge political lift with countless unintended consequences. It's worth thinking about how deregulation has changed the face of the airline industry. But the troubles of America's smaller airports—and the communities they serve—have roots far deeper than the demise of the Civil Aeronautics Board.
The merger will, of course, cause some more consolidation. The alternative is that we have two giant global airlines and two smaller ones that can't possibly survive much longer.