Airline Mergers and Government Intervention

As described in this article on The Economist, the US Department of Justice has finally dropped resistance to the proposed merger of US Airways and American Airlines. In my opinion, this is a good thing because it not only follows the way the DoJ is moving towards dealing with airline mergers, including not blocking recent ones such as the merger of United Airlines and Continental. It also allows the two companies to exit the limbo and operational problems of dealing with a potential merger that is being held up, and allows them to focus on how to deal with the competition. Airlines in the US have often gone in and out of bankruptcy, including Frontier in Denver where I’m from, and has been a serious problem for those seeking steady unemployment, as a bad year could almost crush airlines. This merger allows US Airways and American Airlines to have a larger base of funds and revenue, and also make it easier for American to compete with low-cost carriers like Southwest that have been a serious problem for traditional airlines.

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