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Yes, US Airways is worried about its takeover of American Airlines. It should be. The study prepared for the Consumer Travel Alliance (CTA) on competing overlapping one-stop routes alerted regulators to a possible problem. Now, a new study just released by the Government Accountability Office (GAO) has shown the competitive overlap is even more severe than anticipated.

The initial study by CTA pointed to one-stop connecting flights and found that there were 761 overlapping connecting routes between AA and US Airways. Almost 40 percent of AA’s routes were overlapped by US Airways and about 30 percent of US Airway’s routes were overlapped by AA. That was bad, but perhaps not a wooden stake in the heart of this merger.

Before the CTA study, according to GAO:

A key concern for DOJ [Department of Justice] in reviewing an airline merger is the loss of a competitor on nonstop routes. The loss of a competitor that serves a market on a nonstop basis is significant from a competitive perspective because nonstop service is typically preferred by most passengers and routes that only have nonstop service do not benefit from the availability of alternative, albeit lower valued, connecting service.

Even comparing the nonstop airport-pair routes between this AA/US merger and the previous CO/UA merger didn’t look good for the new merger. But, then again, it only affected a tiny portion of the airlines’ overall routes.

Based on October 2012 traffic data, the two airlines overlap on 12 nonstop airport-pair routes, which are listed in figure 6.34. For seven of these 12 nonstop overlapping airport-pairs (generally between an American hub and a US Airways hub) there are currently no other competitors on a nonstop basis and in only one instance is a low cost airline (Southwest) present. And unlike the United—Continental merger, where most of the endpoint cities had other airports in the region, fewer of these airport pairs have significant other airports in the region. This is especially true for the Charlotte (CLT)—Dallas (DFW) and Phoenix (PHX)—DFW pairs, where few alternate options are available at either endpoint.

The CTA study moved the goalposts and took a look at competition based on connecting flights. After all, hub-and-spoke systems operate via connecting flights at the airline hubs.

When the GAO report was released during the Senate Aviation Subcommittee hearing last Wednesday, it almost drew gasps. The GAO investigators took a look at the overlapping connecting routes and concluded, “there would be a loss of one effective competitor in 1,665 airport pair markets affecting more than 53 million passengers.”

The report goes on to compare this kind of overlapping competitive routes to the previous CO/UA merger and noted:

…compared to the last major airline merger in 2010 between United and Continental, there would be 530 more airport pairs losing an effective competitor. This would affect 18 million more passengers compared to the merger between United and Continental.

So, with the GAO grist being added to the AA/US merger deliberations, the writing on the wall that once seemed so clear is becoming less compelling. Through meetings with the Department of Justice (DOJ) lawyers working on this antitrust analysis, CTA knows that DOJ has conducted its own studies. It is believed that they echo the results of the CTA and GAO studies that have focused on the dramatic loss of competition should this merger be approved.

During the most recent Senate Aviation Subcommittee hearing, Doug Parker, the incoming CEO of The New American Airlines and current CEO of US Airways, noted time and time again that their airlines only have 12 overlapping nonstop routes and that this merger will enhance competition.

But, it seems that the litmus test for competition may now be overlapping competing airport-pair markets rather than simply looking at nonstop routes.

If that is the case, and the CTA and GAO studies have succeeded in moving the goalposts, this AA/US merger is going to undergo far closer scrutiny and may be in danger of being denied by DOJ.