America ‘s department of justice has dropped its opposition to the merger of American Airlines and US Airways. This will be a big relief for whole air-transportation industry. American Airlines and US Airways planed to create the biggest airline in the world by carrying out the $11 billion merger.

From my perspective,  the merger is not a wise decision. The merger will cause the merged company to bulky to operate. The organizational structure will be too complicated; thus, the decision making will be inefficient.

What’s more, both the two company will lose customers due to merger. Some customers choose either American Airlines or US Airways instead of another because they do not like the service or culture of the company. If the merger is carried out, these customers may choose other smaller carriers.

The merger seems like to limit the competition, making it harder for the start-ups to enter into the industry. In fact, without regulations and special quota given by the government, the only way that the merger can create barrier to entry is the lower price. Lowering price will make it much more difficult for American Airlines and US Airways to increase their revenue.

Reference: http://www.economist.com/blogs/schumpeter/2013/11/american-airlines-and-us-airways