MONOPOMERGER

   The recent announcement of the proposed merger of American Airlines and US Airways stands to mark a new evolution in American commercial aviation landscape, yet again. This big merger will undoubtedly raise many concerns from a variety of sources. The continual shrinking of the number of domestic carriers has begun to smell of monopolistic intent to some. Pilots, the industry over, are hoping that they have signed with the absorber and not the absorbed. Meanwhile, American airline consumers continue to watch ticket prices go up and quality of service go down. Does all of this discord spell doom and gloom for the airline industry, or is it just growing pains during a down economy?

   Monopoly seems a strong word to use when describing the effects of this airline merger, but should it? If American Airlines & US Airways are able to successfully merge, the resulting airline will be the largest in America. The combination of routes and hub airports that these airlines currently serve accounts for roughly 20% of the total domestic airline market. While having 20% of shares in a company does not win the majority vote, if two of your friends also hold 20% each, then the combination of your shares would. Currently, Southwest Airlines has about 18% of the market and United and Delta have about 17% each, the remainder is split-up amongst many minor carriers (Martin, 2012). If any combination of three of these industry players were to get together, the fix could be in. The Sherman Antitrust act of 1890 was instituted by President Theodore Roosevelt in an effort to prevent major railway companies from fixing prices by eliminating competition through acquisitions and mergers. The idea is that fair competition breeds better prices as well as industry development and innovation. The Department Of Justice’s Antitrust Division is tasked with investigating all mergers and acquisitions that could present competitive harm to a given industry. It is believed that the DOJ will not prevent the proposed merger. The reality of the situation is that American Airlines has been struggling, and the absorption of American by US Airways prevents the sunken ship and strengthens US’s standing. Therefore, for better or for worse, as far as the consumer is concerned, I guess this is really just the natural flow of the industry right now. As a soon to be graduate, it feels like the fewer would-be employers that there are the less competitive the job salaries will be when I am deciding on a place to invest my life’s work. At least I will not be dealing with the possibility of my life’s work being unfairly undervalued, as so many post-merger pilots have recently experienced.   

   Pilot seniority disputes have become the industry standard over the past decade. When a company is absorbed by a better performing company, it seems that its pilots are not as valuable as the absorbers pilots are. This disparity has led to well publicized lawsuits, and many bitter people. Seniority, by definition, is determined by the measure of the length of time an individual has been with a company. However, as is pointed out by Susan Heathfield in her article “What Seniority Means at Work”, and I quote, “(seniority) should never be the only factor considered in employment decisions” (Heathfield, n/a). The merger of US Airways and America West Airlines is a prime example of contracts gone wrong. In this instance, US Airways pilots were the benefactors of the seniority based promotion contract, while America West pilots would not be getting raises due to their hire dates. Many America West pilots had more hours in the aircraft type and better service and performance records than the US Airways pilots who were being promoted before them. The ensuing battle has yet to be fully settled, and began in 2008 (Judicial View, 2010). These issues make an already challenging merger into a potentially dangerous one, as rifts are formed in cockpits and companies around the industry. Merger issues have been cited as contributory causes to many safety incidents and mishaps over the past decade in US commercial aviation. It may be wise for the FAA to develop a pilot seniority schedule for merged airlines that outlines exactly how to determine the value of flight hours in type model, performance records, and date of hire in creating the new seniority list. It has become obvious that, however disappointing it is, these battles can go on far too long, and the constructive conclusion will not likely be met unless it is forced.
   Though there are disruptive changes happening in American commercial aviation, has there ever been a time when there were not? Fortunately, most all of us in the aviation industry tend to be a smart bunch of dedicated nuts who enjoy solving problems and losing sleep. This bodes well for the future of the American aviation industry, no matter the demands and challenges we face.   

Works Cited

Bloomberg Business Week. (2004, December 5). Why Consumers Hate Mergers. Retrieved February 18, 2013, from businessweek.com: http://www.businessweek.com/stories/2004-12-05/why-consumers-hate-mergers

Heathfield, S. M. (n/a, n/a n/a). What Seniority Means At Work. Retrieved February 18, 2013, from about.com: http://humanresources.about.com/od/workplaces-organizations/g/what-is-seniority-in-the-workplace.htm

Judicial View. (2010, June 4). Pilot Seniority Dispute Follows Airline Merger. Retrieved February 18, 2013, from The Judicial View: http://judicialview.com/Court-Cases/Transportation/Pilot-Seniority-Dispute-Follows-Airline-Merger/45/12260

Martin, H. (2012, August 7). American-US Airways merger could hurt consumers, report says. Retrieved February 18, 2013, from latimes.com: http://articles.latimes.com/2012/aug/07/business/la-fi-airline-merger-20120808

US Department Of Justice. (n/a, n/a n/a). About US Department Of Justice. Retrieved February 18, 2013, from justice.gov: http://www.justice.gov/atr/about/index.html