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By: Nick Blumberg on 03/19/2013
The CEOs of Tempe-based US Airways and bankrupt American Airlines made the case for their companies’ proposed merger before a Senate subcommittee Tuesday. The two men argued joining forces would be good for the airline industry and consumers.
If the deal goes through, US Airways CEO Doug Parker would lead the new airline, which will keep American’s name and be headquartered in Texas. Parker told a Senate antitrust subcommittee the merger would create more competition, and wouldn’t lead to significant reductions in flights or jobs.
But consumer advocates raised concerns that consolidating the airline industry hurts customers. Diana Moss of the American Antitrust Institute said this proposal is similar to the mergers of United and Continental, and Delta and Northwest.
“Both mergers substantially eliminated competition on key hub-to-hub routes, many of which experienced the exit of low-cost carriers and regionals, and also pre- to post-merger fare increases," Moss said.
But American CEO Tom Horton said ticket prices are low relative to costs, like fuel. And Parker thinks low-cost carriers have done better in many cases than legacy airlines.
“Allegiant, Alaska, Hawaiian, Spirit, Virgin America, Frontier, JetBlue, Sun Country -- that’s where all the growth is," Parker said. "While there may not be any new ones added of late, there are plenty out there. It’s an intensely competitive business, and this just allows us to compete better against those airlines.”
The merger deal still needs approval from the Justice Department, the court overseeing American’s bankruptcy, and shareholders.
Updated 3-19-13 3:10pm