MONEY

American Airlines, US Airways Merger Would Probably Lead To Higher Fares And Fees

04/25/2012 02:33 pm 14:33:20

See those planes in the sky? They're not the only things climbing higher.

A proposed merger between American Airlines and US Airways probably would result in costlier airfares and airline fees, according to experts.

US Airways has struck deals with labor unions at American Airlines, which filed for bankruptcy in November, in order to effect a merger between the two carriers, according to the Associated Press. US Airways still is working to win the support of American Airlines' board, lenders, and executives.

If US Airways and American Airlines end up merging, just four airlines -- the new American Airlines, United, Delta and Southwest -- would control nearly 90 percent of the domestic airline market, according to a JPMorgan Chase research note cited by the Las Vegas Sun. With so few companies controlling such a huge share of the market, the likeliest outcome would be higher fares and fees, according to analysts.

"Fewer airlines means less competition. And you know what that means -- higher prices for the traveling public," wrote Ellen Creager, travel writer for the Detroit Free Press, in a recent column.

Airfares are likely to rise because of "simple supply and demand, coupled with rising fuel prices," according to MSNBC. Since low-cost carriers are not likely to replace the flights that would be cut after a merger between American and US Airways, there are likely to fewer flights on offer, and the ones that are left will cost more.

Peter Greenberg, CBS News' travel editor, wrote in a recent blog post for The Huffington Post that he has yet to see a merged airline start or maintain lower fares. He wrote that since airlines are trying to reduce the number of flights and planes they use, "airfares have nowhere to go but up."

The Wall Street Journal also recently argued that an American/US Airways merger would lead to "some higher fees and costs."

Joshua Schank, president of the Eno Center for Transportation, told USA Today that if US Airways and American Airlines merge, passengers are likely to have to pay higher ticket prices, especially on flights between hubs such as Dallas, Chicago, Phoenix, and Philadelphia.

After the recently completed merger of Continental and United, airlines already are busy raising fares and fees. Delta Airlines raised airfares by $10 to $20 last week on tickets bought within seven days of the trip, and United and American Airlines matched the fare hike, according to USA Today. And Southwest Airlines raised airfares by $4 to $10 per round-trip in March, according to the Associated Press.

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