Opinion

The Great Debate

Why airline mergers are inevitable

The American Airlines/US Airways merger talks are on hold due to the ongoing antitrust trial led by the Department of Justice. The D.O.J. is concerned, from the perspective of protecting consumers’ interests, that the resulting airline would have too much market power in many of its locations. Though this is true (assuming nothing about the airlines’ business was changed and no assets were divested), the underlying issues are broader than that.

This is an inevitable story of consolidation and creative destruction and the cyclicality of the two. This proposed merger — or one like it – will happen. It’s just a matter of time. But let’s compare an American Airlines/US Airways pairing with two, comparable, big-headline mergers.

Back in 2012, the music industry consolidated from four big players to three as EMI was split up. Its music business went to Vivendi’s Universal Music Group and its publishing business to Sony/ATV. In this deal, similar concerns of market power led the European Commission to stipulate that Universal had to sell a third of EMI’s assets. And that deal went through.

Meantime, ending in a different fate in 2011, AT&T finally admitted defeat in its attempted bid for T-Mobile. It would have consolidated the cohort of this nation’s cellular operators from four to three. In this latter case, the firms were up against both the D.O.J. and the Federal Communications Commission.

So why are airline mergers inevitable? It’s because, in many ways, the passenger airline industry is more like the music industry than the wireless-operator industry.

A simple plan to relieve airport congestion

D.J. Gribbin, a former general counsel for the United States Department of Transportation, contributed to this column.

The bankruptcy filing by American Airlines a few months ago signals that the U.S. aviation industry is once again primed for dramatic change.  American Airlines is the last of the major U.S. carriers to seek bankruptcy protection, as most of the other big carriers have completed restructurings or mergers that have reduced the number of full-service carriers from seven in 2005 to just four today.

Industry consolidation can be a mixed bag for the flying public. Mergers can deliver efficiencies from scale, but they can also decrease competition. American Airlines has now become the latest acquisition target, perhaps by US Airways or Delta Air Lines. Against this shifting landscape within the industry, the Federal Aviation Administration (FAA) took an important step to help ensure that consumers continue to benefit from airline competition, especially when they want to swap assets. Instead of allowing airlines to swap some of their operations at the nation’s largest airports – in an effort to further concentrate their shares of regional markets – the FAA wisely chose to initiate the nation’s first-ever “slot auction” at the end of 2011. The long-term benefits for the flying public from this precedent are potentially tremendous.

Why we must profile airline passengers

Philip Baum2Philip Baum is the editor of Aviation Security International and the managing director of Green Light Limited, an aviation security training and consultancy company based in London. The opinions expressed are his own.

Whenever an individual manages to circumvent the security system designed to protect our airports, airlines and the people who use them, we ask why our countermeasures failed. And yet the real problem lies in our determination to screen everybody in exactly the same way using technologies that are not fit for purpose.

Umar Farouk Abdulmutallab, the 23-year old alleged perpetrator of the Christmas Day attack, should have been identified as a potential threat to the flight both in Lagos and again in Amsterdam. Here was a passenger who had bought an expensive ticket in cash in a country different to that of his port of embarkation or his intended destination, was traveling without any checked luggage for a two-week trip over the Christmas period, and about whom some agencies, and his father, had security concerns. It’s not rocket science we need; it’s the deployment of common sense.

The paradox of “simplicity”

milesobrien_136

Miles O’Brien is a pilot, airplane owner and freelance journalist who lives in Manhattan. His blog is located at www.milesobrien.com. The opinions expressed are his own.

Air France Flight 447 went down in a giant, dangerous, violent storm that might not have been survivable under any circumstances. But as the Airbus A-330 penetrated that huge system of thunderstorms, sensors, systems and computers on the plane started failing in a rapid cascade that would make any pilot’s head spin – even if he was not in the middle of extreme turbulence flying blind in the night.

The failures likely sealed the fate of the 228 souls sealed inside that thin metal tube as it hurtled through the dark, stormy night – but were they contributing causes with their own roots – or simply the unavoidable outcomes of a decision to fly such a perilous course?

Flight 3407: deviance and dangerous complacency

Miles O'Brien

Miles O’Brien is a pilot, airplane owner and freelance journalist who lives in Manhattan. His blog is located at www.milesobrien.com. The opinions expressed are his own.

At the Colgan/Continental 3407 crash hearing in Washington on Thursday, an expert from NASA told the National Transportation Safety Board that airliners should be equipped with a new warning system that sounds an alarm in the cockpit when the airspeed gets dangerously low – awakening the crew from its complacency.

There is a bit of irony that this advice comes from NASA, an agency that has collectively killed 14 astronauts and destroyed two $2 billion space shuttles because of complacency on an institutional scale.

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