The UA-US merger and the others waiting in the wings should all be canned by the Justice Department. The Big 6/ Oligopoly airlines have demonstrated conclusively, through their abuse of President Reagan's gift of the late 1980's mergers, that they will use concentrated market power to destroy competition and oppress medium and small-size markets with high fares. These actions are violations of US antitrust law, just as the oligopolies/ monopolies of the Teddy Roosevelt era were--and they should meet with the same "trust-busting" response.
AA-TW was an unforunate necessity due to the reasons listed by Srbmod. But it only makes American a fraction larger than existing UA and won't trigger superconsolidation on its own. Congress may want to consider passing a law banning predatory Karabu-type arrangements in the future. (Quickly, Mr. Icahn has his wallet and is out shopping for another airline to destroy).
UA-US, by combining US's 6 percent market share with United's 22 percent share, would throw the industry "out of balance." DL-CO-NW have already made clear they will not sit by and watch UA-AA take up 50 percent of the market and leave them behind. Yes, UA-US route systems make good synergistic sense for a merger, but the merger as structured would make UA and AA much too dominant at many major airports (DCA, LGA, BOS) and UA way too dominant at many medium and small airports (ROC, SYR, GSO, RIC, ORF).
You're probably aware that DOJ has extended review again beyond April 2, according to the New York Times, because they're unhappy with the antitrust situation related to these markets. They will probably require UA-US to divest a substantially larger chunk of operations to win approval, probably more than UA-US will accept.
The Big 6 do not have the critical mass to destroy the pesky low-fare carriers without on-paper collusion. And of course theyre on their good behavior this year in order to get mergers approved (hence JetBlue's relatively untroubled existence at JFK). But as soon as they'd consolidate into SuperBig 3, they'd attack the icky margin-eroding low-fare carriers nastily. They would be big enough to destroy the best-managed companies, including Southwest. And the Airline Deregulation Act of 1978 would become the dead letter for everyone that it has long been for cities such as Rochester and Syracuse.
This situation is unacceptable to many of us and we are fighting energetically through the only means available--often ill-informed Congresspeople and Senators--to stop it. Unfortunately, many of our Hill folk are proposing cures worse than the disease, like McCain's horrific percentage-triggered gate redistribution bill for major airports. But to whom else may we turn? Big Air wants excessively high profits off the backs of consumers, and doesn't get the fact that their business is steward of a *private-public marriage.* Air travel is a public good, very much subsidized (despite some arguments you'll hear tothe opposite) by Joe Taxpayer. Far more than most industries. They are not autonomous to gouge us.
Are you new to the forum, Ejaymd11? We've had many go-arounds about the good/ bad of mergers, and I'll probably draw some energetic rebuttals.
The best news, of course, would be if Big Air would clean up their act, and use their size to pass savings along to the consumer. Then no one would be against consolidation, since it would benefit the public. But unfortunately airlines use size to extort excessively high profits (eg late 1990's), and deny the benefits of deregulation to medium-and small communities.
Need a new airline paint scheme? Better call Saul! (Bass that is)